Deleted e-mails cost Philip Morris $2.75 million.

• Author: Swartz, Nikki
• Position: Up front: news, trends & analysis

A federal judge July 21 ordered Philip Morris USA Inc. to pay $2.75 million in sanctions for destroying e-mails sought by the Justice Department in its suit against the tobacco giant, United States v. Philip Morris USA Inc.

U.S. District Judge Gladys Kessler imposed the steep sanction for what she described as the company's "reckless disregard and gross indifference" to a court order requiring preservation of relevant evidence. As an additional penalty, the judge barred Philip Morris from using testimony at trial from any of its 11 top executives, including the director of corporate responsibility, whom sources say allowed the continued deletion of the e-mails over a two-and-a-half-year period.

After learning of the possible problem in February 2002 during the deposition of a company employee, Philip Morris began an inquiry into the matter. However, it was not until June 19, 2002--four months later--that Philip Morris notified the court about the possible loss of e-mails by employees. Moreover, sources say Philip Morris continued its monthly deletions of e-mail in February and March of 2002. In addition, Phillip Morris specifically identified at least 11 employees who failed to follow the appropriate procedures--and those employees hold some of the highest positions in the company, including the director of corporate responsibility and the senior principal...