E-discovery firm can't find its e-mails.(E-MAIL)

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Guidance Software Inc. has been accused of gross negligence and proceeding in bad faith in a gender discrimination suit because it could not find e-mails critical to the case. Ironically, the firm, which provides search and analytical tools that dig up digital evidence on hard drives and networks, failed to find its own e-mails related to the plaintiff's performance.

According to the Associated Press, former Guidance Marketing Director Cassondra Todd accused the firm's chairman of pressuring a manager to fire her, in part because she is a woman. After she received a bad performance review in 2007, she asked for an investigation. Guidance found no evidence of discrimination and refused to strike the negative review from Todd's file.

Todd was laid off and subsequently filed a wrongful-termination claim. Both parties were required to turn over information related to the case. Guidance had little to contribute to the discovery process. However, a former company manager found and turned over several e-mails related to Todd's performance review among memos he had printed and saved.

In one message, Tim Leehealey, Todd's first manager at Guidance, asked whether someone in the company was setting Todd up to be fired.

William McDonald, the arbitrator handling Todd's case, ordered Guidance to do a more thorough round of e-discovery. The company came back empty-handed--except for news that one of its e-mail backup tapes had been corrupted and no one had noticed for nearly a year.

As a result, McDonald ordered Guidance to pay for Todd's expert witnesses, travel costs, and rescheduling of the trial. He also ordered Guidance to search its backup tapes over the firm's protests that it would take weeks to do so.

Guidance officers insisted they did not hide information, blaming a lost laptop for part of the problem. They also said the company was not legally required to search its backup tapes initially because reading them was cost-prohibitive.

According to federal law, all electronically stored information is potentially discoverable. But they distinguish between "reasonably accessible" files and those that are too expensive to produce, at least in initial e-discovery. Backup tapes often count as overly burdensome, experts say.

Ultimately, however, the arbitrator decided in Todd's favor and awarded her more than $300,000, about twice her annual compensation. A federal court will soon consider whether she should receive damages under separate laws that prohibit discrimination.

Guidance was "egregiously in violation of everything they report to be best practices," Todd told the media. "They had every resource at their disposal. They didn't want to take it seriously."

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