UNITED STATES INTERNATIONAL TRADE COMMISSION
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`Washington, D.C.
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`
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`
`
`In the Matter of
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`CERTAIN LITHIUM ION BATTERIES,
`BATTERY CELLS, BATTERY
`MODULES, BATTERY PACKS,
`COMPONENTS THEREOF, AND
`PROCESSES THEREFOR
`
`
`Inv. No. 337-TA-1159
`
`
`ORDER NO. 34:
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`
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`INITIAL DETERMINATION GRANTING COMPLAINANTS LG
`CHEM LTD. AND LG CHEM MICHIGAN INC.’S MOTION FOR
`DEFAULT JUDGMENT, CONTEMPT, AND SANCTIONS
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`(February 14, 2020)
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`TABLE OF CONTENTS
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`I.
`II.
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`INTRODUCTION ............................................................................................................... 1
`FACTUAL BACKGROUND ............................................................................................. 3
`A.
`Procedural History ................................................................................................... 3
`B.
`Findings of Fact Concerning Spoliation ................................................................ 18
`1. Prior to the Filing of the Complaint ................................................................ 18
`2. Subsequent to the Filing of the Complaint ..................................................... 45
`Findings of Fact Concerning Compliance with Order No. 13 .............................. 52
`C.
`APPLICABLE LAW ......................................................................................................... 67
`ANALYSIS ....................................................................................................................... 72
`A.
`SKI’s Destruction of Evidence and Obligation to Preserve .................................. 72
`1. Following April 29, 2019, the Filing of the Complaint .................................. 72
`2. Following April 9, 2019, the Receipt of the Cease and Desist Letter ............ 75
`SKI’s Culpable State of Mind ............................................................................... 92
`B.
`The Documents’ Relevance and Prejudice to LG Chem ..................................... 105
`C.
`SKI’s Non-compliance with Order No. 13 .......................................................... 119
`D.
`APPROPRIATE SANCTIONS ....................................................................................... 129
`INITIAL DETERMINATION AND ORDER ................................................................ 131
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`III.
`IV.
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`V.
`VI.
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`

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`I.
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`INTRODUCTION
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`
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`On November 5, 2019, complainants LG Chem Ltd. and LG Chem Michigan Inc. (“LG
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`Chem” or “Complainants”) moved (1159-013) for an order entering default judgment against
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`respondents SKI Innovation Co., Ltd. and SK Battery America, Inc. (“Respondents” or “SKI”) due
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`to contempt of Order No. 13 and spoliation of evidence (hereafter, “CMD”). Specifically, LG Chem
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`contends “SKI began a document-deletion campaign in anticipation of the claims made in this
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`investigation,” and which continued well into this investigation, and then defied the terms of Order
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`No. 13, which had ordered discovery into this allegation. See CMD at 1. LG Chem argues these acts
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`constitute spoliation and contempt of Order No. 13, respectively, justifying a remedy of default or, in
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`the alternative, the taking of various elements of LG Chem’s claims as established. Id. at 59, 62.
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`On November 15, 2019, the Commission Investigative Staff (“Staff”) filed a response in
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`support of LG Chem’s motion (hereafter, “SRD”). On November 18, 2019, the Staff filed a letter
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`informing me of one sentence in its response which required clarification. EDIS Doc. ID 694853.
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`Also on November 15, 2019, LG Chem submitted a notice of supplemental evidence regarding the
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`motion for default and sanctions (hereafter, “CSE1”). EDIS Doc. ID 694668.
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`On November 20, 2019, with leave granted by Order No. 19, SKI filed its response to LG
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`Chem’s motion for default and sanctions (hereafter, “RRD”). Specifically, SKI opposed the motion,
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`while also acknowledging that some relevant documents were lost, and, as a consequence, a narrow,
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`“closely linked” adverse determination was warranted. RRD at 1. SKI also stated that a hearing on
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`the matter was not necessary. Id. at 84.
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`On November 26, 2019, LG Chem moved (1159-023) for leave to file a reply in support of its
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`motion for default and sanctions. As is typical, LG Chem attached the proposed reply to the motion
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`(hereafter, “CPR”).
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`1
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`On November 27, 2019, and through a corrected version on November 29, 2019, I entered
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`Order No. 28, which granted LG Chem’s motion for leave to file a reply (1159-023) and ordered
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`supplemental briefing in connection with the original motion for default and sanctions from all parties.
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`The order identified several topics the parties were to discuss and set deadlines and page limits for
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`each response. Order No. 28 at 2-4.
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`On December 6, 2019, SKI filed a letter, effectively informing me of supplemental evidence,
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`recently produced and relevant to LG Chem’s motion for default and sanctions (hereafter, “RSE1”).
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`EDIS Doc. ID 696552. Also on December 6, 2019, the Staff filed its supplemental response pursuant
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`to Order No. 28 (hereafter, “SSR”), and LG Chem did the same (hereafter “CSR”).
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`On December 9, 2019, LG Chem filed a letter to, among other things, correct the document
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`which was Exhibit 65 to its motion for default and sanctions. EDIS Doc. ID 696726.
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`On December 13, 2019, SKI filed its supplemental response pursuant to Order No. 28
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`(hereafter, “RSR”).
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`On December 23, 2019, LG Chem filed a second notice of supplemental evidence (hereafter,
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`“CSE2”).
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`On January 21, 2020, SKI filed its own notice of supplemental evidence related to LG Chem’s
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`motion for default and sanctions (hereafter, “RSE2”). EDIS Doc. ID 699636. To this, LG Chem
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`filed a response on January 23, 2020, challenging SKI’s submission as more than a mere notice and
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`containing argument with no relationship to the underlying motion for default and sanctions. EDIS
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`Doc. ID 700055. As a preliminary matter, I agree that SKI’s January 21, 2020 submission is largely
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`irrelevant to the present motion for sanctions and default.
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`2
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`Lastly, on January 24, 2020, SKI filed a letter to correct the document which was Exhibit 151
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`to its January 21, 2019 notice of supplemental evidence. EDIS Doc. ID 700138.1
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`II.
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`FACTUAL BACKGROUND
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`The events relevant to LG Chem’s motion for default and sanctions begin before the filing of
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`the complaint in this investigation and continue through to the present. The facts which can be
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`discerned from the evidence and briefing are as follows.
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`A.
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`Procedural History
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`On April 29, 2019, LG Chem filed its complaint with the U.S. International Trade
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`Commission pursuant to section 337 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1337,
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`alleging, as supplemented, violations of section 337 based upon the importation into the United States,
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`the sale for importation, and/or the sale within the United States after importation of certain lithium
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`ion batteries, battery cells, battery modules, battery packs, components thereof, and processes therefor
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`by reason of the misappropriation of trade secrets, the threat or effect of which is to destroy or
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`substantially injure an industry in the United States. 84 Fed. Reg. 25858 (June 4, 2019). The notice
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`
`1
`For ease of reference, each of the foregoing filings are listed below with the identifier used in
`this initial determination:
`Party
`Date of Submission
`LG Chem
`November 5, 2019
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`November 15, 2019
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`November 26, 2019
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`December 6, 2019
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`December 23, 2019
`November 20, 2019
`December 6, 2019
`December 13, 2019
`January 21, 2020
`November 15, 2019
`December 6, 2019
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`Abbreviation
`CMD
`CSE1
`CPR
`CSR
`CSE2
`RRD
`RSE1
`RSR
`RSE2
`SRD
`SSR
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`Attached Exhibits
`1-94
`95-98
`99-112
`113-143
`144
`1-102
`~
`103-148
`149-154
`1-2
`1-17
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`3
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`SKI
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`Staff
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`of institution named the SKI entities as the respondents, and identified the Staff as a party to the
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`investigation. Id. LG Chem’s complaint alleges:
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`
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`Respondents, “between 2016 and 2018, misappropriated a vast number
`of LGC Trade Secrets directed to the design, development and
`manufacture of electric vehicle (“EV”) batteries. The SKI Respondents
`did so by conspiring with then-LGC employees—who have since
`moved to Respondents—to transfer LGC’s most sensitive Trade
`Secrets. These Trade Secrets include highly proprietary manufacturing
`processes and systems for the production of EV batteries. A vast
`number of these Trade Secrets were surreptitiously downloaded by
`these former LGC employees and electronically copied and given to
`SKI in a deliberate and wide-ranging operation over an extended period
`of time. Other Trade Secrets were unlawfully disclosed to SKI by the
`former LGC employees after joining SKI. Some of these former LGC
`employees went so far as to identify the Trade Secrets they intended to
`misappropriate on the very curricula vitae they sent to SKI seeking
`employment.
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`Compl. at ¶ 4; see CMD at 6-7. Thus, discovery in this investigation involved document requests
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`from LG Chem to SKI generally regarding “the full extent and nature of SKI’s misappropriation and
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`unlawful use of LG Chem’s trade secrets in developing the Accused Products.” CMD at 1-2.
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`In the course of this discovery, on September 11, 2019, and pursuant to Ground Rule 3.4.1,
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`LG Chem filed a letter describing four alleged discovery deficiencies on the part of SKI. EDIS Doc.
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`ID 687898. One of those deficiencies derived from a spreadsheet recently produced by SKI and
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`bearing Bates number SK00066125 (hereafter, “the 6125 spreadsheet”), which allegedly “evidence[d]
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`a deliberate effort to locate and destroy documents central to the [investigation].” Id. at *1. LG Chem
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`explained the 6125 spreadsheet was located in the recycling bin of a former LG Chem, now-SKI
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`employee,
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` Id. The
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`6125 spreadsheet identifies itself as a list of “documents extracted” based on a keyword search for
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`those documents “that can be misleading due to their titles if accessed externally.” Id. As observed
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`by LG Chem:
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`4
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`The spreadsheet identifies approximately 1000 documents “extracted”
`per a keyword search, which apparently included documents containing
`the keywords “competitor,” “LG,” “LGC,” “LG Chem,” and “L
`Company” in their titles. . . . numerous documents [] appear to detail
`LG Chem’s confidential information, for example:
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`Id. at *1-2. Two small excerpts of the spreadsheet are shown below:
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`. . . .
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`5
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`CMD, Ex. 64 (Tab “Team Room”);
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`id. (Tab “Mail”).
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`LG Chem also notes the metadata for the 6125 spreadsheet indicates it was created on April
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`12, 2019, which was “four days after LG Chem sent the cease and desist letter to SKI.” Id. at *2.
`6
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`That cease and desist letter (hereafter, “the April 8 letter”) was attached to LG Chem’s filing as
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`Exhibit 2, and is shown below:
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`
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`EDIS Doc. ID 687898, Ex. 2.
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`The next day, on September 12, 2019, SKI responded and first urged that “[t]he issue does
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`not require the ALJ’s intervention, and certainly not at this time.” EDIS Doc. ID 688060 at *1. SKI
`7
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`continued to claim that the 6125 spreadsheet “is not related to the April 8, 2019 cease and desist letter
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`sent by LGC to SKI. Rather, it is a spreadsheet created by SKI’s IT security team in connection with
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`a routine security inspection of SKI documents.” Id. SKI contends this routine inspection began with
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`an email sent “not only to SKI, but also to non-battery SK group companies” and “before SKI received
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`LGC’s cease and desist letter—the cease and desist letter was sent via the Korea postal service and
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`was not delivered to SKI until April 9.” Id.
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`SKI’s submission then argues the April 8 letter “did not trigger any obligation under U.S. law
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`for SKI to preserve documents for this investigation, as it did not create a reasonable expectation of
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`litigation in the United States.” EDIS Doc. ID 688060 at *2. SKI based this conclusion on the letter’s
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`original language of Korean, its transmission between Korean addresses, its reference to a prior
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`Korean lawsuit, and its similarity to a letter sent and year and half earlier, on October 23, 2017, “in
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`which litigation ensued only in Korea over employee non-compete agreements and related allegations
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`of potential trade secret misappropriation.” Id. This is all important, according to SKI, because
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`Korean law does not involve an obligation to preserve documents, in contrast to United States law.
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`Id.
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`The next day, September 13, 2019, I held a teleconference to discuss the issue and explained
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`to the parties:
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`Some of the issues I don't necessarily need to hear anything on, and I'll
`let you know what that is. In fact, let me just get started and I'll say that
`the first issue raised by complainants is the one that I don't think I need
`to hear anything more on. I am -- I am -- I am troubled by this whole
`issue. I'm troubled on the one hand because the potential remedy, if I
`were to find that there should be some sort of remedy appropriate, starts
`out with a forensic audit as the plaintiffs have requested which strikes
`me as very invasive and potentially very bad.
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`On the other hand, I am at least as troubled by the prospect of there
`having been some sort of [spoliation] of evidence. So I think that I don't
`really need to hear anymore about this. I think that the parties should
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`8
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`just proceed to motions practice. So given that the parties have clearly
`discussed this issue and have briefed it to some extent, I think that the
`next step is complainants may file a motion to compel if they desire.
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`
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`EDIS Doc. ID 688496 at 8:20-9:19.
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`Ten days later, on September 23, 2019, LG Chem filed a motion (1159-007) on the issue;
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`specifically, a motion to compel SKI to “produce all relevant and discoverable information that was
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`deleted, to the extent it is still recoverable, as determined after a reasonable analysis by its currently
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`retained forensic consultants and requiring the forensic consultants to submit interim progress reports
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`and a final report of their methodology and work in a sworn statement,” to “explain its destruction of
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`evidence thoroughly and through a sworn statement, and to confirm its full cooperation with the
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`forensic investigation,” and “to certify the reasonableness and thoroughness of SKI’s discovery
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`efforts in fulfilling discovery obligations an complying with the order.” EDIS Doc. ID 689017 at 22.
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`To justify its requested relief, LG Chem first presents its theory as to why SKI hired so many LG
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`Chem employees, and in the course of that hiring, required the candidates to disclose “specific details
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`of projects on which each applicant worked in his or her previous workplace, including the names of
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`team members with whom they worked. . . . derived from LG Chem’s trade secret information.” Id.
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`at 3-4. LG Chem then references the prior successful Korean lawsuit LG Chem initiated in October
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`of 2017 on this issue, and that the April 8 letter was sent three weeks before the complaint in this
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`investigation was filed because SKI’s illegal practices had not yet stopped. See id. at 4-6.
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`Then, LG Chem references the 6125 spreadsheet, along with another spreadsheet produced
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`during discovery, that “list[] thousands of examples which, by title alone, appear to strongly support
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`LG Chem’s trade secret claims, and reflect many types of LG Chem’s confidential information.”
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`EDIS Doc. ID 689017 at 7. LG Chem provides the following examples taken from these
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`spreadsheets:
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`9
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`Id. LG Chem claims that destruction of documents, such as those identified in the 6125 spreadsheet,
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`is not in dispute—only the reason why the destruction occurred is at issue—based on correspondence
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`with SKI counsel. See id. at 9 (“Rather, according to SKI’s lawyers, the document deletion was part
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`of ‘a routine security inspection’ by IT personnel ‘in an effort to improve storage space efficiency’
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`and comply with unidentified company policies and unspecified ‘Korean privacy laws.’”). LG Chem
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`acknowledges that the destruction may have stopped since the beginning of this investigation and
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`related district court litigation, based on a discovered April 30, 2019 email from SKI’s
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`
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`to various department heads ordering the cessation of document destruction now that the dispute with
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`LG Chem has become “official”:
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`10
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`

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`EDIS Doc. ID 689017, Ex. 15. Nevertheless, LG Chem’s motion to compel hinges upon the ideas
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`that “only SKI knows the full scope and nature of the documents it has destroyed or withheld, why,
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`and when. Until the facts are out in the open about what evidence previously existed but has been
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`permanently destroyed and what evidence remains available to be discovered, LG Chem is at a serious
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`and unfair disadvantage in collecting and assessing the facts to which it is entitled to support its claims
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`and to challenge SKI’s defenses” (id. at 12) and “LG Chem should not be forced to rely on SKI’s
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`lawyers’ conclusory assurances that SKI’s massive deletion of files relating to LG Chem’s trade
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`secrets was merely part of a ‘routine’ IT practice to ‘improve storage space efficiency’” (id. at 19).
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`Pursuant to my order shortening response time (Order No. 11), the Staff and SKI filed
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`responses to LG Chem’s motion on October 1, 2019. The Staff largely supports the motion, with
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`modifications only to “the particular order [of forensic examination] proposed by Complainants.”
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`EDIS Doc. ID 689904 at 2. Notably, the Staff states “[t]o the Staff’s knowledge, as a consequence
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`of their deletion, none of the documents recited in SKI00066125 have been produced by Respondents
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`in this investigation” (id. at 4) and “the available evidence (contained in SKI00066125) indicates that
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`Respondents previously engaged in a concerted effort to destroy documents relating to Complainants
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`and/or the subject matter of this investigation” (id. at 6).
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`11
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`SKI, on the other hand, argues the motion should be denied for various reasons. EDIS Doc.
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`ID 689925. SKI repeats its claim that the early April security sweep was “routine” and “[t]he IT
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`Security department’s identification of the documents in SK00066125 was unrelated to this lawsuit,
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`which did not exist, and which SKI could not reasonably anticipate, at that time.” Id. at 1. More
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`specifically, SKI identifies
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` as the author of the email initiating the early April security sweep. Id. at 4. SKI also
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`identified
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` as the author of the 6125 spreadsheet, which was created and distributed on April
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`12, 2019, “in an effort to help identify documents that may be subject to the compliance requirements
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`outlined in the April 8 memorandum, and to help the
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`
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`identify documents that may warrant further inspection . . . .” Id. at 5. To explain why the 6125
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`spreadsheet listed so many filenames containing LG Chem’s name or alias, SKI represents that
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`. . . For these reasons,
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` keyword searches included the terms ‘LG’ and ‘L sa,’ as well as
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`the terms ‘competitor’ and ‘action plan.’” Id. SKI represents that after the present complaint was
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`filed, it “[v]ery soon thereafter, []took appropriate steps to preserve documents, including issuing
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`litigation holds to relevant custodians, taking a snapshot of the company’s VDI server, and archiving
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`email folders of relevant employees. . . . There is no indication that any documents listed in
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`SK00066125 were deleted after the litigation hold was issued.” Id. at 6-7.
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`SKI also contends that “after becoming aware of [the 6125 spreadsheet] SKI began working
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`to investigate the situation” and “devoted significant resources to determine the status of the
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`documents and locate as many as it can.” EDIS Doc. ID 689925 at 1-2. SKI represents that of the
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`12
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`

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`980 documents in this spreadsheet, 612 had been recovered. Id. at 2. Yet SKI cautions, in the context
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`of avoiding the requested forensic examination, that:
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`
`
` out of the remaining
`documents that SKI has been unable to recover, it is virtually certain
`that all but perhaps a handful are unrecoverable beyond unusable partial
`or corrupt information, no matter the amount of forensic work
`conducted. Thus, any additional forensic work would provide LGC
`with minimal, if any, benefit, while imposing a significant burden on
`SKI. As such, LGC has not satisfied its burden for compelling a
`forensic exam because the burden on SKI outweighs any of the likely
`benefit identified by LGC. See Certain Activity Tracking Devices, Sys.,
`and Components Thereof, Inv. No. 337-TA-963, 2016 WL 1459537, at
`*3 (Feb. 26, 2016) (denying a motion to compel a forensic inspection
`because the burden “outweighs any of the likely benefits identified by”
`the moving party). For these reasons, LGC’s motion should be denied.
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`Id. SKI later repeats its contention that forensic examination would yield nothing fruitful due to the
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`configurations of its systems:
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`As a result of these efforts, some of which were time-consuming, out
`of the 980 documents listed in SK00066125, 612 documents were
`located. SKI’s counsel reviewed the recovered documents for privilege
`and produced to LGC discoverable documents on September 29, 2019.
`Thus, of the 980 documents, SKI has been unable to recover 368, or
`approximately 38% of the documents. In light of SKI’s routine
`document retention and security settings, there is there is virtually no
`likelihood of recovering 363 of the 368 unrecovered documents and no
`certainty that forensic work would successfully recover the remaining
`five documents. See Ex. 4, Ackert Decl. ¶¶ 12, 18, 20, 22. Because the
`retention timeframe for emails that are deleted from Outlook and sent
`to the Recoverable Items folder is zero days, there is virtually no
`likelihood that forensic work will successfully recover emails from
`SKI’s servers. See id.¶¶ 19– 21; Ex. 2,
` ¶ 14. In addition,
`due to the normal operation of Microsoft Outlook, it is highly unlikely
`that the substance of any deleted email or attachment will be
`recoverable from the Outlook offline storage tables. See Ex. 4, Ackert
`Decl. ¶¶ 15–18. Finally, there is virtually no likelihood that any
`document deleted from SKI’s
` team rooms will be
`recoverable given the recycle bin timeframe of 30 days and the backup
`timeframe of approximately four weeks. See id. ¶¶ 22–23; Ex. 2,
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` ¶ 13.
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`13
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`

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`Id. at 8; see id. at 9-12 (discussing cases where forensic examination was denied). SKI’s opposition
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`further presents its overall position that any forensic examination is unwarranted on the grounds that
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`it simply had no duty to preserve evidence at all before the instant complaint was filed, because LG
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`Chem’s April 8 cease and desist letter would have only “raised, at most, the prospect of litigation in
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`Korea,” where such duties do not exist. See id. at 13-15.
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`The next day, October 2, 2019, LG Chem filed a notice of supplemental evidence. EDIS Doc.
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`ID 689941. That evidence was limited to a July 23, 2018 email produced to LG Chem on September
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`28, 2019, entitled “L-Company electrode line equipment main specifications” and included a reply
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`from
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` See id. at 1. LG Chem
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`highlighted the reply as stating, “[p]lease delete everything in the emails that discuss L-Company.
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`You know why.” Id. That excerpt is reproduced below:
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`14
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`EDIS Doc. ID 689941, Ex. 1.
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`LG Chem’s motion to compel was granted-in-part on October 3, 2019 with Order No. 13. I
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`found “LG Chem has shown that a forensic examination is appropriate, and Respondents have not
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`15
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`shown it will be unduly burdensome or costly.” Id. at 2. As to the potential success or failure of LG’s
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`requested examination, I explained that “Respondents have already done one themselves, and it may
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`well be that another will be unlikely to recover more documents. . . . But under the circumstances,
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`LG Chem should be given an opportunity to confirm that any such review is adequate.” Id. at 3. An
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`examination was thus ordered on the following terms with slight modifications from LG Chem’s
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`original request:
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`1. Respondents shall immediately engage their currently retained electronic
`discovery and forensics consultants, who shall search for and attempt to
`recover all documents and associated electronic information relating to
`either LG Chem or the subject matter of this investigation that have been
`deleted by Respondents, including but not limited to the documents
`referenced in SK00066125. The search shall be conducted in accordance
`with industry-standard practices and the specific review directives listed in
`Exhibit A to LG Chem’s proposed order granting this motion. Respondents
`shall notify LG Chem of when and where Respondents’ consultants’
`forensic examination will begin, and permit one of LG Chem’s retained
`consultants to attend and observe the process.
`
`2. Within four business days of this order, Respondents’ consultants shall
`submit to LG Chem an interim status report that shall include, but need not
`be limited to, a summary of the consultants’ progress, the results of the
`work to date, and the anticipated schedule for any remaining work so as to
`permit LG Chem’s retained consultants to attend and observe the
`examination.
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`3. Within seven business days of this order, the forensic examination
`described in paragraph (1) above shall be completed, and Respondents’
`consultants shall submit to LG Chem a final report in the form of a sworn
`statement that shall include, but need not be limited to, their qualifications,
`a description of the people, documents, and systems or repositories that
`were involved, the methodology employed, and the results of their work.
`The statement shall confirm that the methods were consistent with industry
`standards, as well as the specific directives listed in Exhibit A to LG
`Chem’s proposed order granting this motion, and that Respondents
`provided full access and cooperation.
`
`4. Within ten business days of this order, Respondents shall produce to LG
`Chem all discoverable information responsive to LG Chem’s discovery
`requests recovered as a result of the forensic examination described in
`paragraph (1) above, to the extent they have not already done so.
`
`16
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`Order No. 13 at 4-5.
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`Discovery for the present investigation then proceeded, with other disputes arising and
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`resolving in the interim. SKI’s compliance with the deadlines set in Order No. 13, however, hit a
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`snag by October 10, 2019, when it moved (1159-009) for a one-day extension to submit the interim
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`status report referenced above. EDIS Doc. ID 690936. The motion, which was unopposed, explained:
`
`On Wednesday, October 9, a public holiday in Korea, the forensic
`experts for both SKI and LGC began analyzing the data SKI provided
`in response to the forensic experts’ requests. In attempting to conduct
`aspects of the technical forensic examination, the forensic expert for
`SKI encountered technical difficulties that impeded the extraction,
`loading, and review of relevant SKI data files.
`
`. . . .
`
`Extraction of SK data files took longer than expected due to file format
`issues that had to be resolved.
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`Id. at 2. I granted this limited extension the next day with Order No. 14.
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`I understood at this time that discovery would resume per the deliverables required by Order
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`No. 13. But on October 22, 2019, LG Chem filed a motion (1159-010) for an order to show cause
`
`why SKI should not be held in contempt for violating Order No. 13. EDIS Doc. ID 691830. That
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`motion, although seeking an order of contempt, requested relief otherwise similar to the kind of relief
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`requested in motions to compel. See id.
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`On October 23, 2019, I received a letter from LG Chem regarding a number of discovery
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`difficulties it allegedly was encountering with SKI. See EDIS Doc. ID 692111. To facilitate
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`resolution of those issues, I ordered the parties to appear the next day for an in-person conference.
`
`See id. At the conference, I noted that if LG Chem’s motion were meritorious and justified more
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`drastic sanctions (i.e., adverse inferences, adverse determinations, or default) than the motion
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`requested, it would settle many of the other discovery issues between the parties, but I also stated that
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`“I’m not suggesting that [LG Chem] should seek more drastic sanctions necessarily.” EDIS Doc. ID
`17
`
`
`

`

`
`
`692306 at 29:22-30:17. LG Chem voluntarily withdrew the motion on October 28, 2019, before
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`either the Staff or SKI responded. EDIS Doc. ID 692508.
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`Nevertheless, LG Chem’s view that SKI is in violation of Order No. 13 remained, as
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`evidenced by the present motion for default and sanctions (1159-013), filed on November 5, 2019.
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`As noted above, the present motion adds an allegation of general spoliation of evidence in addition
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`to a perceived violation of Order No. 13, and seeks more drastic relief than was sought in LG Chem’s
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`October 22, 2019 motion. What follows are the findings of fact regarding the alleged spoliation and
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`contempt of Order No. 13, based on the evidence presented by LG Chem and SKI.
`
`B.
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`Findings of Fact Concerning Spoliation
`
`1.
`
`Prior to the Filing of the Complaint
`
`On October 23, 2017, LG Chem sent to SKI a first cease and desist letter notifying SKI that
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`LG Chem “ha[s] not choice but to take all possible legal action to protect our trade secrets against
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`your company and our key staff members recruited by your company” with a request “that your
`
`company suspend the recruitment of the specialists currently employed at LG Chem.” CMD, Ex. 43.
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`The letter was written in Korean and delivered through the Korean postal system. RRD, Ex. 6 at
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`Exhibit B.
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`Following this letter, LG filed suit against certain ex-employees in Korea and won an
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`injunction on February 13, 2018 barring them from employment at SKI for various periods of time
`
`based on non-compete agreements which had been entered into with LG Chem. CMD, Ex. 44; RRD,
`
`Ex. 6 at ¶ 6. The injunction was modified but otherwise left in place by the Daejeon High Court on
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`July 19, 2018. CMD, Ex. 44. The injunction was needed, according to the court, due to evidence
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`that “SK Innovation may benefit from the [individuals’] expert knowledge or knowhow related with
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`the automotive battery business through reducing trial and error and development time and that the
`
`18
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`
`

`

`
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`[individuals] continue to perform related work at SK innovation while denying the effects of the Non-
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`Compete Agreement, the need for preservation by ordering the preliminary injunction stated in the
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`[prior] order has been demonstrated.” Id. at *10-11. Yet, LG chem employees continued to be hired
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`away from LG Chem to join SKI; in total, at least eighty such employees. CMD, Ex. 9; CSR at 8.
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`During the pendency of the Korean action, between February 12 and 13, 2018, SKI employee
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` instructed his team that there
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`was “ongoing litigation relating to lateral hiring” and they should thus conduct a “[c]lean-up of the
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`documents relating to the ‘L’ Company” by moving them away from their normally-stored team room
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`location (CMD, Ex. 47). The email made explicit note of “[c]ompetitor comparison materials” and
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`“[d]ocuments you took from the ‘L’ Company” as requiring relocation, and further instructed all
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`recipients, “[p]lease don’t save this email as well!!”:
`
`19
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`

`

`
`
`
`
`llilo:
`
`Subject:
`
`RE: "L” Company documents transfer {by this Wednesday]
`
`Please make sure to transfer ”L" Company materials by Wednesday.
`
`
`
`Subject:
`
`"L" Company documents transfer [by this Wednesday)
`
`There is ongoing litigation relating to lateral hiring.
`Therefore, I request as follows since the Manufacturing Technology Center needs a prior preparation.
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`We will compile the team room documents to move somewhere else, and I heard we can review the
`materials later.
`
`Please manage so that relevant materials would not exist in the Team Room.
`
`Please don't save this email as welll!
`
`Clean—up ofthe documents relating to the "L” Company
`1. Documents to be transferred
`
`1] "L” company—related materials saved in the Team Room
`2] Competitor comparison materials
`3] Documents you took from the ”L” Company
`2. Transfer schedule: by 14 [Wed]
`3. Transfer location
`
`CMD, Ex. 47.
`CMD, Ex. 47.
`
`20
`20
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`

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`On June 20, 2018, also during the