McCORMICK, C.

Submitted: December 7, 2022

Ethan Townsend, Kevin M. Regan, Ashley R. Altschuler, McDERMOTT WILL &EMERY LLP, Wilmington, Delaware; Michael J. Sheehan, McDERMOTT WILL &EMERY LLP, Chicago, Illinois; Russell Hayman, McDERMOTT WILL &EMERY LLP, Los Angeles, California; Sarah E. Walters, McDERMOTT WILL &EMERY LLP, Boston, Massachusetts; Counsel for Plaintiff BDO USA, LLP.

Julia B. Klein, KLEIN LLC, Wilmington, Delaware; Lita Beth Wright, AMINI LLC, New York, New York; Counsel for Defendant EverGlade Global, Inc.

MEMORANDUM OPINION

McCORMICK, C.

This decision enters default judgment in favor of the plaintiff due to the defendant's egregious acts of spoliation. In March 2021, Plaintiff BDO USA, LLP ("BDO") filed suit against Defendant EverGlade Global, Inc. ("EverGlade") to enjoin a smear campaign allegedly carried out by EverGlade and non-party Eric Jia-Sobota. Court-ordered discovery revealed that Jia-Sobota spoliated massive amounts of evidence. BDO moved for sanctions in the form of a default judgment and fee-shifting. In response, EverGlade admitted that Jia-Sobota engaged in spoliation but attempted to distance itself from Jia-Sobota, who is EverGlade's founder, controlling stockholder, board chairman, and CEO. The court held an evidentiary hearing to evaluate EverGlade's role in the spoliation (the "Sanctions Trial"). This decision holds that Jia-Sobota acted on behalf of EverGlade in spoliating evidence and that the only fair and just outcome is a default judgment and feeshifting in favor of BDO.

I. FACTUAL BACKGROUND

The Sanctions Trial took place over two days. As reflected in the Schedule of Evidence submitted by the parties, the record comprises 340 joint exhibits, live testimony from three fact witnesses, and deposition testimony from nine fact witnesses. The factual findings address the acts of spoliation; they do not reach the merits of Plaintiff's claims.

A. The Smear Campaign

Jia-Sobota is a former BDO partner who started a rival consulting firm, EverGlade, in the spring of 2020 while still at BDO. After Jia-Sobota's departure from BDO, in May 2020, BDO initiated arbitration proceedings and filed a related action for injunctive relief in aid of arbitration against Jia-Sobota and EverGlade in the Superior Court of the District of Columbia, alleging that Jia-Sobota breached the BDO partnership agreement. The D.C. litigation placed significant financial pressure on EverGlade. A downturn in EverGlade's business intensified that pressure. In October 2020, EverGlade was forced to reduce its workforce. EverGlade's investors and Board members, Paul Argy and Matt Franz, began to demand the return of their investment. EverGlade even ran out of cash, leading Jia-Sobota to loan it $180,000.

Jia-Sobota was EverGlade's founder, controlling stockholder, CEO, and Board chair. As CEO, Jia-Sobota was responsible for responding on EverGlade's behalf to the risks posed by the D.C. litigation. Jia-Sobota attempted to resolve the D.C. litigation through direct negotiations with Chris Orella, a BDO partner. Those discussions began in Fall 2020 but broke down in January 2021.

After settlement negotiations failed, BDO became the target of a social media smear campaign attacking BDO and its senior leadership. The campaign involved no fewer than 50 YouTube videos and 40 Tweets accusing BDO partners of racism, bigotry, homophobia, sexual harassment, corruption, and fraud, among other things. The campaign also used fake LinkedIn accounts impersonating BDO executives and email accounts used to disseminate defamatory content directly to BDO clients. Some of the posts appeared to draw on information obtained by Jia-Sobota when he was a BDO partner. The campaign occurred from February 13 through around April 5, 2021.

Jia-Sobota has a narrative about who was behind the smear campaign-an anonymous person who contacted him through a Swismail.com account at the end of January or early February 2021. According to Jia-Sobota, the stranger described himself as part of a larger "movement" to highlight "BDO's racism and sexism for black history month and women's month . . . and if [Jia-Sobota] had any information to share, [he] could do so anonymously." Jia-Sobota created his own Swismail account to communicate with the stranger. Jia-Sobota states that he provided information to this person, including links to the D.C. litigation and contact information for BDO personnel that were "helpful" in his earlier litigation. This decision does not make factual findings as to Jia-Sobota's narrative, except to say that it was proffered by Jia-Sobota during depositions in this action.

B. BDO Files Suit In The Court Of Chancery.

On March 22, 2021, BDO filed suit in the Delaware Court of Chancery against EverGlade seeking injunctive relief and damages in connection with the smear campaign. Jia-Sobota learned of the litigation the same day. BDO asserted Count I for defamation per se, Count II for tortious interference with business relations, Count III for injunctive relief, and Count IV for civil conspiracy. On March 29, 2021, BDO amended its complaint (the "Amended Complaint") to add Count V for deceptive trade practices under Delaware's Deceptive Trade Practices Act and Count VI for trade libel.

With its initial filing, BDO moved for expedited proceedings and a temporary restraining order ("TRO"). The court denied the motion for a TRO in a bench ruling on April 9, 2021, reasoning that the relief sought was quite broad and that it appeared to seek to enjoin categories of speech beyond the reach of equity. The court, however, granted BDO's motion to expedite proceedings due to the troubling nature of the allegations and the potential harm to BDO. The court ordered the parties to confer on a schedule for expedited proceedings.

No further action to continue the smear campaign occurred after April 5, 2021.

C. EverGlade Suspends Jia-Sobota And Begins An Internal Investigation.

On April 28, 2021, the EverGlade Board decided to conduct an internal investigation into BDO's claims. It suspended Jia-Sobota from his positions as director and CEO of EverGlade while the investigation was pending. Counsel for EverGlade informed the court of this development during an April 30, 2021 hearing and represented that Jia-Sobota was "completely restricted from any access to EverGlade's systems or data." Counsel further represented that Delaware counsel had taken the reins of decisionmaking regarding EverGlade's defense in the litigation.

D. The Scope Of The Investigation

On May 3, 2021, EverGlade hired Julian Ackert of iDiscovery Solutions ("iDS") to provide discovery services in connection with this action and to conduct a forensic review in support of the internal investigation. iDS collected and imaged devices beginning on May 7, 2021, starting with the following devices in Jia-Sobota's possession: an iPad; Jia-Sobota's personal and work laptops; Jia-Sobota's iPhone; and a thumb drive. iDS collected these devices from Jia-Sobota at his residence on May 7, 2021.

It is unclear to what degree Jia-Sobota was involved in the internal investigation. Jia-Sobota testified at the Sanctions Trial that he had no knowledge of the investigation and no involvement in directing which devices iDS collected for analysis. Ackert took the same position at the Sanctions Trial-he testified that EverGlade's counsel alone directed the investigation and defined its scope. Contemporaneous emails show, however, that Jia-Sobota identified which electronic devices would be collected and examined in the investigation. And Jia-Sobota admitted that he did not disclose to iDS additional online accounts that he used, including the Gmail and Swismail accounts he supposedly used to communicate with the stranger whom he blames for the smear campaign. As a result, iDS's data collection was limited.

On May 10, 2021, iDS's Tyler Swasy emailed EverGlade's litigation counsel, Marc Casarino, describing an issue with his attempt to image Jia-Sobota's laptop. Swasy said that the disk used to collect the data had been corrupted. On May 11, Swasy contacted Jia-Sobota and told him he needed to reimage Jia-Sobota's work laptop, which also occurred on May 11, 2021.

E. iDS Reports Preliminary Results Of The Investigation To Outside Counsel.

By early June 2021, iDS discovered that a software called "CCleaner" used to "clean" data from computers had been run on Jia-Sobota's EverGlade work laptop during the smear campaign. There was no internet browsing history on Jia-Sobota's EverGlade work laptop. Data artifacts, however, established that Jia-Sobota actually used both Google Chrome and Microsoft Edge in March and April 2021. iDS concluded that, prior to its collection, all internet browsing history had been wiped from the laptop. iDS also concluded that the laptop had either been factory reset or a new operating system was installed as of April 15, 2021.

In an internal iDS email, Ackert summarized iDS's findings in preparation for a meeting with EverGlade's counsel. The findings stated that CCleaner was used, that there was "zero Chrome browser history" on Jia-Sobota's EverGlade work laptop, and that Jia-Sobota's personal laptop had been reset. iDS briefed EverGlade's litigation counsel on these issues, including the use of CCleaner.

F. EverGlade Reinstates Jia-Sobota.

By mid-June 2021, EverGlade's two remaining Board members, Argy and Franz, wanted nothing more to do with EverGlade. After learning about the smear campaign,and concerned that legal fees and Jia-Sobota's mismanagement were draining the company's resources, they decided to exit their investment.

On June 12 and June 16, 2021, respectively, Argy and Franz resigned from the EverGlade board. They contemporaneously entered stock repurchase agreements with EverGlade, selling their entire respective interests in the company. To complete their exodus, on June 16, 2021, they reinstated Jia-Sobota as CEO and board member.

By August 2021, Jia-Sobota transferred 51% of his EverGlade stock to his spouse, Jerry Jia-Sobota, for no consideration, while retaining the remaining 49%. Also on August 1, 2021, Jerry "replaced" Jia-Sobota as Chairman of the Board and became President of EverGlade. Jerry Jia-Sobota did not take on any actual responsibility in these roles, however, because he was on medical leave. Jia-Sobota served as interim President and the sole member of an executive committee of the Board that had full power to act unilaterally. Taken collectively, with the exception of his brief period of suspension, Jia-Sobota's responsibilities did not change until October 2021.

G. Jia-Sobota Replaces EverGlade's Outside Counsel.

After being briefed by iDS on the use of CCleaner on Jia-Sobota's work laptop, EverGlade's prior legal counsel ceased to act as EverGlade's counsel and, by early July 2021, formally withdrew from representing EverGlade. EverGlade's new counsel took over on June 16, 2021, and shortly thereafter became Jia-Sobota's personal counsel as well.

On June 18, 2021, iDS's Ackert briefed EverGlade's new outside counsel on the forensic investigation and the use of CCleaner on Jia-Sobota's work laptop. Ackert explained what CCleaner is, what its effects are, and how frequently it was run during the smear campaign. On June 21, 2021, both Ackert and EverGlade's new counsel spoke to Jia-Sobota and informed him of the results of the forensic investigation. Ackert told Jia-Sobota that because of the lack of data on his work laptop-including web browser history-the investigation was "inconclusive," so iDS would not be able to prepare a report "clearing" Jia-Sobota of potential involvement in the smear campaign. Nor could iDS substantiate any aspect of Jia-Sobota's story about having been contacted by an anonymous Swismail user.

Jia-Sobota was frustrated that iDS was unwilling to "clear" EverGlade of involvement in the smear campaign. He began to pressure EverGlade's counsel and iDS to reach a different conclusion. On June 22, 2021, Jia-Sobota emailed iDS, stating his belief that iDS was "looking at this wrong. While I understand that it may be hard to show I did or did not log into swismail [sic] as an example, who cares[?] That is BDO[']s job. Our job is to show [that EverGlade] did not create or post videos." Jia-Sobota outlined a report that he requested iDS prepare, including answers to the following questions:

• During the relevant time period, which Jia-Sobota defined as February 1 through March 27, 2021, "[d]id anyone at EverGlade have NordVPN installed on their controlled devices?"

• During the relevant time period, "did any EverGlade controlled devices have Filmora installed or use Filmora?"

• During the relevant time period "(up to the filing of the lawsuit) was there evidence that these videos were in EverGlade[']s possession?"

• "Twitter: Is there any evidence that anyone had registered the following accounts on any device controlled by EverGlade? A. #boycottbdo; B. #boycottbdo1; c. #boycottbdo2[.]"

• Whether there was "any evidence on any device controlled by [E]ver[G]lade that they had accessed a VPN network" at certain times related to YouTube, Gmail, and LinkedIn account logins.

Ackert refused to draft such a report.

H. EverGlade's Litigation Conduct

During the period of iDS's investigation, EverGlade and Jia-Sobota were doing their best to obstruct discovery in this litigation. They first fought BDO's request to depose Jia-Sobota and required BDO to seek relief from the court. Jia-Sobota ultimately sat for a deposition on May 27, 2021. This was before EverGlade's initial counsel of record withdrew, so Jia-Sobota hired separate, personal counsel to defend his deposition. Jia-Sobota's personal counsel was truculent. He refused to permit counsel for EverGlade to object on behalf of EverGlade. He interposed speaking objections intended to coach the witness and asserted inappropriate objections, such as objections on grounds of "scope" and "dead horse." Counsel then unilaterally terminated the deposition when faced with a line of questioning that he did not like. This conduct prompted another motion to compel, for which the court scheduled a hearing on June 30, 2021.

During the June 30, 2021 hearing, the court gave the parties guidance on how to proceed, while commenting on the dreadful conduct of Jia-Sobota's counsel during his May deposition. The court urged counsel to hit a proverbial reset button and live up to their obligations as officers of the court.

That did not happen. Discovery proceeded after the June 30, 2021 hearing much like it had before. BDO pressed EverGlade on its discovery shortcomings. EverGlade resisted, claiming that it had fully met its discovery obligations. For example, when BDO requested to inspect EverGlade's devices in July 2021, EverGlade asserted that it had "complied fully" with BDO's discovery requests. EverGlade made these representations even though EverGlade and its counsel had received iDS's report concerning the use of CCleaner.

Between September 14 and September 17, 2021, four more discovery motions were filed-three by BDO and one by EverGlade. And the case schedule slipped. The court held a hearing on the motions on November 4, 2021, resolving two of the four motions from the bench and appointing Molly DiBianca as Special Discovery Master to address the others.

DiBianca swiftly brokered a resolution for the remaining discovery disputes, which was memorialized in a stipulated form of order entered on November 11, 2021. Among other things, the November 11, 2021 order reflected EverGlade's agreement to provide devices previously imaged by iDS to BDO's forensic expert, Charles River Associates ("CRA"), for its independent imaging.

I. Discovery Reveals Massive Spoliation, Prompting The Sanctions Motion.

The device inspection resulting from the November 11, 2021 order revealed to BDO what EverGlade already knew-that much of the discovery BDO sought had been destroyed. Between February and September 2021-the period during and immediately following the smear campaign-Jia-Sobota destroyed an enormous amount of evidence. As BDO expert witness and CRA employee, Daniel Roffman, would later testify at the Sanctions Trial, the devices at issue were either "factory reset or there were significant deletions." Jia-Sobota had also wiped internet browsing data and used CCleaner to destroy files on his work laptop. Roffman wrote a January 18, 2022 report that comprehensively assesses the full scope of the deletion (the "Roffman Report"), which was as an exhibit at the Sanctions Trial.

BDO proved that Jia-Sobota undertook the following spoliative or obstructive acts:

• Jia-Sobota set up CCleaner to automatically remove, from February 16 through March 23, 2021, "past internet history, recently-opened document information, and recycle bin artifacts" from his work computer. The

Roffman Report estimated that this alone would have destroyed over 100,000 files on Jia-Sobota's work laptop.

• Jia-Sobota wiped the internet history from his personal iPhone and iPad prior to May 7, 2021, after which these devices were sent back to Apple without first being imaged.

• Jia-Sobota deleted files and images from an EverGlade OneDrive account, which he used for document and data storage.

• Jia-Sobota destroyed documents on seven thumb drives that iDS had provided to CRA on November 21, 2021. Jia-Sobota was the sole custodian of these thumb drives. He deleted documents from five of them. iDS was able to image the sixth, but neither the sixth nor seventh contained data related to the smear campaign "within the viewable files."

• Jia-Sobota removed-or worked with someone else at EverGlade to remove-all user data from seven of the eight laptops that iDS would review and hand over to CRA by conducting "factory resets" of those devices between May 28 and September 15, 2021. Jia-Sobota also conducted factory resets of his personal laptop-which had previously been a former EverGlade employee's work laptop-on April 15, 2021, and August 26, 2021.

The factory resets "removed all of the data and overwrote substantial portions of the hard drive."

Although Jia-Sobota was responsible for the lion's share of the spoliation, his spouse also destroyed evidence. Specifically, Jerry Jia-Sobota traded in his iPhone in September 2021 and thus could not produce it for review. He conducted at least three of the above-mentioned factory resets on EverGlade employee computers in or around September 2021, which eliminated any materials or access to tools and/or VPNs that might have been used in the campaign. EverGlade had not undertaken any preservation efforts on these laptops before the factory resets.

Although the deletion was substantial, Roffman was able to use forensic tools to reconstruct traces of activity on Jia-Sobota's laptop and EverGlade's OneDrive account. Plaintiff used this reconstruction to suggest that Jia-Sobota and EverGlade were involved in the smear campaign. This decision does not make any factual findings concerning whether Jia-Sobota and EverGlade perpetuated the campaign.

The newly revealed spoliation prompted BDO to move for sanctions, including adverse inferences or default judgment (the "Sanctions Motion"). The court scheduled a hearing on the Sanctions Motion for March 16, 2022.

During the March 16, 2022 oral argument on the Sanctions Motion, EverGlade admitted that Jia-Sobota had engaged in spoliation. EverGlade, however, attempted to distance itself from Jia-Sobota, even though he was the company's founder, controlling stockholder, CEO, and board chairman. In response, the court converted trial on Plaintiff's claims to a trial into the Sanctions Trial-a two-day evidentiary hearing on EverGlade's role in connection with the spoliation.

J. Jia-Sobota Admits To Spoliation But Claims It Was Justified Because He Was Fearful That BDO Would Take Threatening Action If It Obtained The Evidence.

When forced to reckon with the mounting evidence of his spoliation during the Sanctions Trial, Jia-Sobota first claimed that he did not remember much. He then offered a new narrative, testifying that he destroyed evidence out of fear that BDO would do something to him if BDO acquired evidence of the smear campaign.

Jia-Sobota claimed that he "didn't want to be retaliated [against] by BDO any more than I already had been." He said that he was afraid for his life, that BDO had "sent people to my house for months to harass me[,]" in response to which he "had to go out and get a concealed carry permit." He added that people from BDO would come "at night, pounding on windows" and "shining laser pointers in my window[,]" and that BDO "even sent the Metropolitan Police to my house." He claimed that this fear of retaliation also motivated him to lie in his prior deposition testimony about his document preservation efforts.

EverGlade leaned into this theme in its Post-Sanctions Trial briefing, citing Jia-Sobota's testimony and an email from Jia-Sobota to Ackert and Klein on September 5, 2021 referencing "paid goons outside my house."

The narrative is no justification for spoliation. It was not credible in any event.

K. The Court Of Chancery Action Is Transferred To The Superior Court.

Before the Sanctions Trial, and in a last-ditch effort to evade this court's gaze, EverGlade filed a motion to dismiss for lack of subject matter jurisdiction in the Court of Chancery on March 11, 2022. Specifically, EverGlade appealed to the no-injunction rule, which circumscribes the Court of Chancery's equitable jurisdiction when invoked to enjoin future, defamatory statements. In essence, EverGlade argued that because the conduct at issue in BDO's claims is speech, a jury should be available to decide the central issues, such as malice and damages for the defamation claim.

Upon review, I determined that Court of Chancery jurisdiction would be proper over the majority of BDO's claims, but was "concern[ed] about overextending equitable authority when it pertains to speech." Nonetheless, transferring the case either in its entirety or in part to a separate jurist would have resulted in judicial inefficiency, given the resources invested into this case to date. Furthermore, it might have rewarded EverGlade for attempting to wriggle out of accountability for its sanctionable conduct. As a result, I requested that the Chief Justice designate me to sit as a Judge of the Superior Court pursuant to his powers under Article IV § 13(2) of the Delaware Constitution. The Chief Justice granted the request in an order dated December 1, 2022, and the case was transferred from its original Court of Chancery docket to that of the Superior Court on BDO's motion.

Shortly after transfer, counsel for EverGlade filed a jury demand. The court's entry of a default judgment, however, forecloses a jury trial.

II. LEGAL ANALYSIS

"A party in litigation or who has reason to anticipate litigation has an affirmative duty to preserve evidence that might be relevant to the issues in the lawsuit." To determine whether a person should reasonably anticipate litigation, the court assesses "whether the facts and circumstances . . . lead to a conclusion that litigation is imminent or should otherwise be expected. A court may sanction a party who breaches this duty by destroying relevant evidence or by failing to prevent the destruction of such evidence."

EverGlade does not dispute that Jia-Sobota engaged in spoliation by destroying evidence when he had a duty to preserve it. Nor could they. Jia-Sobota and Jerry Jia-Sobota destroyed evidence from February 16 to September 15, 2021. The D.C. litigation was ongoing during that period, and the Delaware litigation commenced in the middle of that period on March 22, 2021. Jia-Sobota received notice of this litigation on March 22, when he received a call from Bloomberg News seeking a comment on the social media campaign and litigation filed that day. Therefore, the destructive acts on or after March 22 were spoliative. Even before March 22, a reasonable person in either Jia-Sobota's or EverGlade's shoes would have understood that they had a duty to preserve the evidence on Jia-Sobota's laptop. The D.C. litigation was ongoing. That case addressed hostilities between BDO and EverGlade over EverGlade's business model, Jia-Sobota's non-compete agreement, and Jia-Sobota's efforts to poach business from BDO. The existence of that litigation in February-paired with the participation in a smear campaign against BDO- gave ample notice to Jia-Sobota that he was under a duty to preserve documents. The result is that every instance in which Jia-Sobota destroyed documents is indeed spoliative.

Rather than dispute that Jia-Sobota engaged in spoliation, EverGlade advances two main lines of defense. First, it argues that Jia-Sobota's spoliation should not be attributed to EverGlade. Second, EverGlade takes aim at what it perceives as excessive sanctions requested by BDO, namely, a potential default judgment. This analysis first concludes that Jia-Sobota's acts of spoliation were done on behalf of EverGlade and then addresses the appropriate sanctions.

A. Jia-Sobota Spoliated Documents On Behalf Of EverGlade.

BDO advances two theories of why Jia-Sobota's acts can be attributed to EverGlade. BDO first raises an agency theory, arguing that the spoliation can be imputed to EverGlade by virtue of Jia-Sobota's various positions at the company. BDO next raises a respondeat superior theory, detailing how the spoliation occurred within the scope of Jia-Sobota's employment at EverGlade, took place on EverGlade's technology, and had the express purpose of aiding EverGlade in this litigation. EverGlade urges the court to apply the respondeat superior framework, arguing that EverGlade is not vicariously liable for Jia-Sobota's spoliation because his role as CEO did not include administering social media campaigns and because he had a purely personal motive for destroying evidence. Even applying EverGlade's chosen legal framework, however, EverGlade is liable for Jia-Sobota's actions.

Under the doctrine of respondeat superior, "[a] servant is authorized to do anything which is reasonably regarded as incidental to the work specifically directed or which is usually done in connection with such work." The scope of employment includes "acts of the servant so closely connected with what he is employed to do, so fairly incidental to it, that they are to be regarded as methods elected by the servant, even though improper, of carrying out the master's business." Whether or not respondeat superior imputes an agent's actions to a principal "can be answered only in light of the particular circumstances of the case under consideration."

Delaware follows the Restatement (Second) of Agency's "scope of employment" test to determine whether the circumstances warrant imputing an agent's actions to its principle. Under the Restatement, an employee's act that does not involve the use of force is within the scope of his employment when: "(1) it is of the kind he is employed to perform; (2) it occurs within the authorized time and space limits; [and] (3) it is activated, in part at least, by a purpose to serve the master[.]"

Here, the act relevant to the court's analysis is management (or mismanagement) of evidence. EverGlade argues that the relevant "act" involved Jia-Sobota's management of EverGlade's social media presence. Where, however, the question is whether to attribute acts of spoliation to an employer under facts like these, the analysis more logically centers on the employee's obligation with respect to the litigation, including the obligation to manage and preserve evidence. Imagine an officer of a corporate defendant destroys relevant evidence in the face of a litigation hold, for instance. To assess the corporation's responsibility, it is not important to know what specific task the officer was doing before he took a break to shred documents or delete emails. What matters in that scenario is his clear obligation to preserve documents related to the litigation.

BDO has satisfied the three relevant elements of the scope-of-employment test. The first element is met. As CEO, Jia-Sobota was responsible for managing all of EverGlade's operations. This included overseeing litigation on behalf of EverGlade, and the record reflects that Jia-Sobota did this by leading settlement negotiations with BDO regarding the D.C. suit. The record also reflects that Jia-Sobota managed EverGlade technology-he reset and stored former employees' computers after they either left or obtained new computers. Preserving evidence, including electronic data on company computers, therefore, was the kind of act he was employed to perform.

The second element is also met. Jia-Sobota's spoliation of evidence occurred within authorized space and time limits. Jia-Sobota was working remotely at home during the Covid-19 pandemic under title of CEO. Although Jia-Sobota did not destroy evidence when sitting in an EverGlade office, that does not matter. The entire company was working remotely at the time. And Jia-Sobota also used EverGlade technology to commit his spoliation by destroying evidence on company laptops. Under the circumstances, the second element is met.

The third element, which asks whether Jia-Sobota sought to serve EverGlade, is also met. This court has held that this element is "broadly-worded" and requires only that the conduct at issue is "activated, in part at least, by a purpose to serve the master." The employee "need not be motivated solely by a desire to aid her employer: [t]he mere fact that the primary motive of the [employee] is to benefit himself or a third person does not cause the act to be outside the scope of employment."

EverGlade argues that Jia-Sobota's motive for spoliation was personal rather than professional because he sought to protect himself from "retaliation against him following his raising the alarm on BDO's knowing federal rule-breaking and fear at his actions being discovered." The court has already addressed Jia-Sobota's unsubstantiated and late-developed retaliation theory.

As a factual matter, the only plausible explanation is that Jia-Sobota destroyed the evidence to shield EverGlade and himself from having their roles in the campaign uncovered. The spoliation occurred in February through September 2021, while EverGlade was immersed in litigation in both D.C. and Delaware. Roughly contemporaneously, Jia-Sobota had fruitlessly attempted to settle the D.C. suit on behalf of EverGlade, a process that largely concluded in January but briefly picked back up in April 2021. Litigation costs relating to BDO had been a perennial issue since EverGlade's inception; in Jia-Sobota's words, "[EverGlade has] been sued since the first month we've existed" and the D.C. litigation was "a lot to deal with" and "expensive." The Sanctions Trial record therefore reflects ample motive for Jia-Sobota to attempt to thwart BDO's claims against EverGlade relating to the smear campaign by destroying evidence.

Furthermore, Jia-Sobota would later directly insert himself into iDS's review process, asserting that "[o]ur job" is to show "we did not create or post videos"- suggesting that, in his mind, the concealment of EverGlade's connection to the campaign was a collective rather than personal effort. Based on the factual record, the only explanation for Jia-Sobota's actions is that he sought to benefit EverGlade.

Even if Jia-Sobota's story of harassment from BDO "goons" were to be believed,it would still be appropriate to impute his spoliation to EverGlade. Mixed-motive conduct satisfies the Second Restatement's third prong for respondeat superior; as stated above, "[t]he mere fact that the primary motive of the [employee] is to benefit himself or a third person does not cause the act to be outside the scope of employment." So, even in that alternate reality, Jia-Sobota sought to protect both himself and EverGlade from harassment. The presence of goons outside Jia-Sobota's front door might certainly provide a primary, personal motive to spoliate evidence, but that explanation still does not negate the court's other findings. Goons or no, Jia-Sobota destroyed evidence while the D.C. and Delaware cases raged on, and Jia-Sobota's actions sought to improve EverGlade's position in those lawsuits.

In sum, all relevant respondeat superior factors are met. Jia-Sobota spoliated evidence within the scope of his employment at EverGlade. This outcome finds further support in the basic policy consideration that corporations might otherwise escape accountability for egregious actions were they off the hook when their CEOs destroy evidence to frustrate an opposing party's case. EverGlade is therefore responsible for Jia- Sobota's spoliation.

B. Default Judgment Is Appropriate.

Having established EverGlade's responsibility for the spoliation, the next issue is how to address it. BDO seeks entry of a default judgment against EverGlade and fee-shifting. This section addresses BDO's request for a default judgment.

Discovery abuse "has no place in [Delaware] courts, and the protection of litigants, the public, and the bar demands nothing less than that [Delaware] trial courts be diligent in promptly and effectively taking corrective action[.]" "The court has the power to issue sanctions for discovery abuses under its inherent equitable powers, as well as the Court's 'inherent power to manage its own affairs.'" The sanctions imposed must be "just and reasonable." Generally, sanctions serve one or more of three functions: remedial, punitive, and deterrent.

Where a motion for default judgment arises from spoliation of electronically stored information ("ESI"), Superior Court Rule of Civil Procedure 37(b) governs the analysis. 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. Specifically, the court must find that the offending party "acted recklessly or with the intent to deprive another party of the information's use in the litigation." Such a finding is a necessary predicate to lesser sanctions, including a jury instruction that the spoliation of information is unfavorable to EverGlade.

Because default judgment is "the ultimate sanction for discovery violations and should be used sparingly," a court may enter a default judgment when "no other sanction would be more appropriate under the circumstances." If a lesser sanction would achieve the same ends, default judgment is inappropriate. Lesser sanctions under Rule 37(b) include a presumption "that the lost information was unfavorable to the party" or an instruction that "the jury that it may or must presume the information was unfavorable to the party[.]"

BDO demonstrated at the Sanctions Trial that EverGlade-through Jia-Sobota- acted with the intent to deprive BDO of the use of the information in this litigation. Jia-Sobota admitted this much. He says that he destroyed the evidence intentionally. He claimed that he did so out of fear of BDO's "goons." As discussed above, that testimony was not credible.

But even indulging that testimony, the spoliation was still intentional. "Intentional destruction means the spoliator acted with purpose." Delaware courts have found a party's destruction of evidence to be intentional where the party "believed that their conduct would limit the information base [the opposing party] would have to use in the pending litigation." In an alternative, goon-populated reality, Jia-Sobota still acted with purpose. He still sought to limit the information base to which BDO would have access. He did not testify that the goons drove him to a less-than-sound mind. Nor have EverGlade or he argued duress as a basis for excusing their conduct. Jia-Sobota's alternative version of events still results in a finding of intent.

The next issue is whether sanctions less extreme than default judgment would fully achieve the purpose of sanctions. The primary impact of EverGlade's spoliation is that there is no direct evidence concerning EverGlade's involvement (or lack thereof) in the smear campaign. To prevail on any of its claims against EverGlade, BDO would need to prove that EverGlade perpetrated the campaign. To prove this point, BDO should not have to rely on circumstantial evidence, which is all that is left. A default judgment would be an appropriate remedy for this act.

EverGlade urges the court to consider the lesser sanction of adverse inferences.After all, BDO's primary claims are for defamation per se, tortious interference with business relations, and deceptive trade practices. To prevail on its primary claims, BDO would have the burden of proving multiple elements by a preponderance of the evidence. For example, BDO would have to demonstrate that the contents of the smear campaign were defamatory. Arguably, EverGlade's spoliation does not impede BDO's ability to obtain or present evidence on the other elements of its claims. Granting judgment in BDO's favor as to those elements, therefore, would not serve to remedy the prejudice to BDO resulting from EverGlade's spoliation. For this reason, EverGlade contends that a lesser sanction is more appropriate.

If courts entered sanctions solely for the purpose of remedying prejudice to a movant, then perhaps a lesser sanction would suffice. But sanctions serve more than remedial purposes-they also punish and deter. EverGlade's acts of spoliation are among the worst one could imagine. If punishment is appropriate anywhere, it is here. If there is any conduct this court needs to deter in future litigation, it is the spoliation committed here. Given the scope of EverGlade's spoliation, neither adverse inferences nor other lesser sanctions would suffice.

In search of a different outcome, EverGlade observes that the court has not entered prior contempt orders or sanctions against it. Although such actions commonly precede the entry of default judgment, they are not required. Where the acts of spoliation are as willful and wide-sweeping as this, prior orders of contempt or sanctions-although common-are not necessary.

C. BDO Is Entitled To Reasonable Attorneys' Fees And Costs.

The entry of default judgment is a tough act to follow. Although fee-shifting seems rather quotidian by comparison, it is warranted.

"Delaware courts follow the American Rule that each party is expected to pay its own attorneys' fees regardless of the outcome of the litigation." Delaware courts have the ability to shift fees "when faced with vexatious litigation conduct 'to deter abusive litigation and to protect the integrity of the judicial process.'" When ordering feeshifting in conjunction with other sanctions, "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."

Here, EverGlade's litigation conduct crossed the line into bad faith. The spoliation is the obvious example of this conduct, which-given its massive scale and prejudice-is sufficient to justify fee-shifting. But the over-aggressive litigation tactics of EverGlade's counsel play a supporting role.

On July 13, 2021, BDO sent a letter outlining deficiencies in EverGlade's production, seeking-among other things-EverGlade's agreement to allow a third-party forensic vendor to conduct a forensic collection of EverGlade's and Jia-Sobota's devices. Counsel for EverGlade responded by a letter dated July 15, denying the "outrageous insinuations" that Jia-Sobota had spoliated evidence. They were not outrageous. Counsel said that BDO's "[d]esperation is [o]bvious" and that Jia-Sobota lost the piece of paper with the Swismail account password because it was a "piece of scrap paper, not a scene from Mission Impossible." There was no desperation. Counsel in the same letter called BDO's request for a third-party forensic vendor review a "thinly veiled attempt by BDO to obtain privileged documents and communications as well as information about the very real investigations into BDO that are presently are [sic] ongoing." Actually, BDO was simply attempting to engage in discovery.

Counsel for BDO later re-raised its initial concerns with EverGlade's document production in a letter to EverGlade's counsel dated September 2, 2021. Based on Jia-Sobota's July 21, 2021 deposition, the letter expressed apprehension regarding iDS's internal review, the effectiveness of Jia-Sobota's suspension from EverGlade, and Jia-Sobota's subsequent reinstatement. Counsel for EverGlade responded on September 13, 2021, voicing "serious concerns regarding BDO's discovery practices." Counsel for EverGlade said that BDO's September 2, 2021 letter "hyperbolically fabricates certain alleged discovery inconsistencies by selectively quoting from Mr. Jia-Sobota's deposition testimony to prop up its repeated baseless claim that it has concerns about the adequacy of EverGlade's discovery efforts." There was no hyperbole. The claim was not baseless. EverGlade's discovery efforts were inadequate.

It goes without saying that, during contentious litigation, attorneys sometimes take positions in the heat of the moment that they later reevaluate and walk back. Here, however, counsel for EverGlade denied any possibility of spoliation and even mocked BDO for its attempt to probe further, even after learning about the use of CCleaner. Under other circumstances, counsel's conduct might read as a set of attempts to introduce levity, correct misunderstandings, or zealously serve a client believed to be accused improperly of wrongdoing. But here, that approach reflected an error of judgment. Counsel for EverGlade stuck to an aggressive position that forced BDO to trudge through repeated motions just to get to the truth of the matter-that EverGlade had engaged in spoliation of case-terminating magnitude. Such an aggressive litigation strategy was an inappropriate response to the situation, and it contributes to a finding of bad faith. BDO's request for fee-shifting is granted.

BDO is entitled to recover the reasonable attorneys' fees and expenses that it seeks, which are fees and costs incurred in connection with: bringing the Sanctions Motion; bringing the motion to compel inspection on September 17, 2021; all proceedings before the Special Discovery Master; and all actions taken by BDO, its counsel, and forensic experts pursuant to the court's November 19, 2021 order resolving various discovery motions, including its submission of a discovery protocol consistent with that order.

III. CONCLUSION

For the above reasons, BDO's motions for entry of default judgment and its motion for fees and expenses are granted. Within ten business days of the entry of this decision, BDO shall submit a petition, supported by an attorney affidavit, detailing the amount of fees and expenses incurred. EverGlade will have five days thereafter to file any objections to BDO's petition. Also within ten business days of the entry of this decision, the parties shall report by letter to the court whether there are any unresolved issues in this action aside from the quantum of fees and expenses. For example, the form of order previously submitted by BDO in the Chancery action does not enter damages in BDO's favor. If BDO is seeking damages, then an additional evidentiary hearing might be warranted. BDO shall clarify the scope of relief it is requesting.