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Organizations Know What Their Employees Know – A Caselaw Update

A recent decision in a whistleblower case against a nonprofit sports association and its employees makes clear that an organization has the right to take back electronic devices in the possession of a co-defendant employee when the devices are owned by the organization. Moreover, the decision stresses that the defendant organization is prejudiced without these devices because an employee’s knowledge is imputed to the organization, and it needs the devices to learn what the employee co-defendant knew and did.

March 12, 2024 — by Nicholas Berenato, Associate, CoDiscovr

A recent decision in a whistleblower case against a nonprofit sports association and its employees makes clear that an organization has the right to take back electronic devices in the possession of a co-defendant employee when the devices are owned by the organization. Moreover, the decision stresses that the defendant organization is prejudiced without these devices because an employee’s knowledge is imputed to the organization, and it needs the devices to learn what the employee co-defendant knew and did.

Our team routinely provides supported and defensible advice on e-discovery in matters where ESI must be gathered from officers, employees, or contractors, including identifying appropriate steps to secure the return of electronic devices in the possession of these individuals.

The plaintiffs in Wegman v. The United States Specialty Sports Association, Inc., 6:23-cv-1637-RBD-RMN, 2023 WL 8599972 (M.D. Fla. Dec. 12, 2023) had brought a whistleblower suit against their former employer, a nonprofit sports organization, and its employees and officers, including its former chief executive officer (CEO). The defendant organization moved to compel the former CEO co-defendant to turn over three electronic devices in his possession because they were the organization’s property.

Ruling for the organization, the court found:

  • the co-defendant conceded that the devices were the organization’s property;
  • the organization had an obligation to preserve the evidence on the devices because they were its property;
  • the co-defendant’s retention of the devices prejudiced the organization because it prevented the organization from fulfilling its duty to preserve evidence; and
  • the organization was further prejudiced by the failure to return the devices because “[o]rganizations know what their employees know,” and it needed the devices to determine what the co-defendant knew, when he learned about it, what actions he took, and who else was involved.

In ordering the co-defendant to return the devices to the organization “immediately,” the court noted that the co-defendant’s failure to return the devices had frustrated the organization’s collection efforts, thwarted its ability to investigate the plaintiffs’ allegations, and interfered with the organization’s ability to prepare its defenses. 

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