*1 Currently before the Court is ValuePart, Inc.'s Motion for Sanctions. Plaintiff alleges that when its former President and Purchasing Manager, Brett Clemens and Shannon Murphy, respectively, started up a competing business, ITR North America (“ITR”), they breached their fiduciary duties to ValuePart; unlawfully solicited critical members of ValuePart's local management team; and stole ValuePart's property and confidential and proprietary information, including pricing information and customer lists. Plaintiff further claims that Defendants attempted to shield their misdeeds by permanently eradicating electronic evidence of their wrongdoing. For the reasons set forth below, the Court recommends GRANTING, in part, Plaintiff's Motion for Sanctions.

BACKGROUND FACTS

Defendants Brett Clemens and Shannon Murphy were employed as the President and Purchasing Manager of ValuePart, and had been working there since at least 1998. In addition to being involved professionally, Mr. Clemens and Ms. Murphy currently live together. Valuepart alleges that, beginning sometime in mid-2005, Mr. Clemens and Ms. Murphy were surreptitiously setting up a competing business -- ITR -- while employed by ValuePart.

In or around June of 2005, ValuePart Director Isa Passini informed Mr. Clemens that Massimo Galassini, the owner of an Italian supply company, was interested in entering the U.S. market and/or in partnering with ValuePart. See Clemens Email at Ex. L. Instead of pursuing this relationship on behalf of ValuePart, Mr. Clemens allegedly usurped the opportunity, and partnered with Mr. Galassini. to launch a competing business. On September 14, 2005, Mr. Clemens emailed Mr. Galassini to inform him that another informed industry player, Jim Delaney, had recently resigned as President of TREK, a competitor of ValuePart. Valuepart contends that Mr. Delaney eventually joined forces with Mr. Clemens, Ms. Murphy, and Mr. Galassini to form ITR.

Emails found on a ValuePart back-up tape reveal that, in October of 2005, Mr. Clemens and Ms. Murphy were looking for personal and commercial real estate in Indiana - while still employed by ValuePart. Later that same month, the couple acquired commercial property in Hobart, IN., the current site of ITR. See emails at Group Ex. N. Throughout this period, Mr. Clemens sought and obtained reimbursement from ValuePart for “business expenses,” that he had incurred – not while furthering ValuePart's business interests -but, apparently, on behalf of ITR.

By October or November of 2005, another key figure was assisting Mr. Clemens and Ms. Murphy in their secret venture. Mark Krummel was ValuePart's Information Technology (“IT”) Manager and Brett Clemens' long-time friend. At his deposition, Mr. Krummel explained that he began working as a consultant for Brett Clemens' father in 1984, and after Mr. Clemens senior's death in 1989[1], he “went to work for Brett .... So, we've worked together from then till pretty much now.” Krummel Dep. at 213. In November of 2005, Mr. Krummel ordered six or seven Dell business laptop computers for Brett Clemens in his own name, and sent them to a ValuePart client's home in Indiana. When asked why he and Mr. Clemens decided to order six laptops, Mr. Krummel conceded that Mr. Clemens likely based the figure on the number of individuals that he knew were going to work for him at ITR, including: Chris Gilleo, ValuePart's Chief Financial Officer, Cheryl Grim, ValuePart's former Customer Service Manager; and Michael Hartley, ValuPart's former lead salesman for the Midwest. Mr. Krummel admitted to setting up ITR's network, as well as at least three of the individual laptops between December of 2005 and February of 2006, when he officially left ValuePart to work for Mr. Clemens.

*2 On December 23, 2005, Mr. Clemens formally resigned from Valuepart. Ms. Murphy submitted her resignation on December 27, 2005, claiming it was effective as of December 23, 2005. Mr. Krummel, however, remained at Valuepart and did not reveal to anyone at the company that he had been or would be working for ITR, until February of 2006. Mr. Krummel explained that he did not tell ValuePart about plans to join Mr. Clemens at that time, because he did not even approach Mr. Clemens about a job until late January or early February of 2006.[2] Mr. Krummel's explanation, however, is belied by the extensive computer work that he performed for Mr. Clemens since at least November of 2005, the fact that he tendered his resignation to ValuePart on January 12, 2006, and by an ITR PowerPoint presentation, which was created in late December 2005 or early January 2006, that listed Mr. Krummel as ITR's I.T. manager, Mr. Krummel's deception was significant for two reasons: 1) because ValuePart unwittingly directed Mr. Krummel, as its IT manager, to collect Mr. Clemens' and Ms. Murphy's laptops on its behalf; and 2) because ValuePart entered into a release agreement with Mr. Krummel that it likely would not have, had it known the extent of Mr. Krummel's involvement with ITR. Both of these issues will be discussed in detail later in this Report.

After the holidays, ValuePart scrambled to fill the void left by Ms. Murphy's and Mr. Clemens' resignations. By the end of January 2006, Ms. Passini became ValuePart's Vice President, and Mr. Rick Farquhar was named President. Prior to that, however, Mr. Krummel's coworker, Marilyn Hilb, had begun to inquire about Mr. Clemens' and Ms. Murphy's ValuePart laptop computers. Ms. Hilb, the current I.T. manager at ValuePart, stated in her affidavit that, shortly after Christmas 2005, she asked Mr. Krummel about the whereabouts of these laptops. Mr. Krummel stated simply that he would take care of it. In mid-January, Mr. Krummel announced his intention to resign, and Ms. Hilb noted that the laptops had not yet been recovered. In the week to ten days that followed, Ms. Hilb twice inquired about the status of the laptops; Mr. Krummel responded that he would personally pick up the computers from Mr. Clemens and Ms. Murphy. Concerned because Mr. Krummel still hadn't followed through on his promise to return the laptops, Ms. Hilb informed Mr. Farquhar, on or around February 1, 2006[3], that the laptops had not yet been returned. Mr. Farquhar demanded that Mr. Krummel secure the laptops immediately. Shortly thereafter, Ms. Hilb recalls, Mr. Krummel returned only one of the laptops to the office; he returned the second laptop a few days later.

At his deposition, Mr. Krummel explained that he had obtained Mr. Clemens' and Ms. Murphy's laptops by early to mid-January of 2006. However, he kept them at his home, because his own laptop was allegedly malfunctioning. Mr. Krummel offers no rational explanation as to why -- if his laptop was, in fact, malfunctioning -- he required the use of not one, but two functioning laptops, and why he wouldn't bring them into the office in any event.

In the interim, ValuePart's counsel notified Mr. Clemens of his obligation to return the laptop computers and to preserve all files and documents, via letter dated January 27, 2006. The letter also set forth Mr. Clemens's obligations under his Employment, Confidentiality, and Non-Competition Agreement with ValuePart, and warned him against raiding ValuePart's employees and violating ValuePart's intellectual property rights. A second, more explicit letter was sent less than two months later, on March 21, 2006, to both Mr. Clemens' and Ms. Murphy's attorney. In the letter, Plaintiff's counsel explained that ValuePart had been investigating claims that Mr. Clemens and Ms. Murphy had wrongfully used ValuePart's confidential and proprietary information to solicit ValuePart's customers, in addition to other charges. The March letter specifically requested that defense counsel “please confirm that Mr. Clemens and Ms. Murphy and their agents, employees, or others working with [sic] at their direction or with ValuePart information, have ceased destruction and deletion of all documents, files, emails and voicemails on [all of their computers and PDAs], which in any way relate to the present controversy between them and ValuePart.” 3/21/06 Letter at Motion Ex. H. On April 25, 2006, attorney Kathryn Schmidt, acting as counsel for Mr. Clemens and Ms. Murphy, retorted that she had advised her clients “of their responsibilities in regard to the maintenance of both paper and electronic documents,” and warned Plaintiff's counsel that “[a]ny further correspondence in regard to these issues will be nothing more than harassment.” 4/25/06 Letter at Reply Ex. G.

*3 On May 16, 2006, Plaintiff filed suit against Defendants, accusing Defendants of violating the Computer Fraud and Abuse Act, 18 U.S.C. § 1030 (a) (5) (A); breach of fiduciary duty; breach of contract, tortious interference with business relationships, conversion, misappropriation of trade secrets, and unfair competition. On May 19, 2006, Judge Anderson signed an agreed Preservation Order, requiring the parties to preserve all information potentially relevant to this case.

Even prior to filing suit, Plaintiff's counsel had retained the services of Smart and Associates, LLP[4] to attempt to retrieve electronic evidence of Mr. Clemens' and Ms. Murphy's alleged wrongdoing. Although Defendants made it difficult, and, in some cases, impossible to conduct a thorough forensic investigation, Mr. David Aberman, of Smart and Associates, submitted three affidavits opining that Defendants had switched out Mr. Clemens' ValuePart hard drive with a recently purchased, never-before used hard drive less than ten days before Mr. Clemens resigned; had deleted numerous files from Mr. Clemens' and Ms. Murphy's ValuePart laptops in the weeks leading up to their resignations; had wiped their current ITR laptops of incriminating information with BCWipe; and had connected Mr. Clemens' and Ms. Murphy's laptop computers to thumb drives and external Maxtor drives, for the likely purpose of transferring incriminating information, and then wiped the thumb drives with BCWipe and destroyed the Maxtor drive. Mr. Aberman noted that BCWipe software “is one of the most effective utilities used in order to remove unwanted files and trails of electronic information.” BCWipe's proprietor's[5] website claims that “it is impossible to restore any data that has been properly wiped.” Aberman's Third Affidavit at ¶ 17. Confronted with the extent of the destruction, on July 19, 2006, Plaintiff filed a Motion for Sanctions for Spoliation of Evidence.

DISCUSSION

Plaintiff argues that a default judgment is the only proper remedy for Defendants' spoliation of evidence in this case. Plaintiff asserts that Brett Clemens, Shannon Murphy, and Mark Krummel stole ValuePart's trade secrets and proprietary information, such as customer and price lists, by transferring this information from their now wiped (Ms. Murphy's) or smashed (Messrs. Clemens and Krummel's) hard drives by means of the now-wiped thumb drives, the physically destroyed Maxtor external drive, and/or a remote “VPN tunnel” between Mark Krummel's ValuePart laptop and ITR's network. Plaintiff claims that, after the information was safely transferred to Defendants' ITR laptops and was utilized by Defendants, Defendants wiped their ITR laptops with BCWipe, a powerful software that makes it virtually impossible to recover the information, documents, emails, and data that were “wiped.”

Defendants counter by arguing that Plaintiff's expert is unqualified, equivocal, and simply mistaken about his conclusions. Therefore, Defendants claim, Plaintiff does not have clear and convincing evidence of wrongdoing. In addition, Defendants argue that Plaintiff has not proven that incriminating, relevant evidence was destroyed when they ran BCWipe on their laptop computers and thumb drives, or when they destroyed Messrs. Clemens' and Krummel's hard drives; or when they destroyed the external Maxtor drive. Defendants further claim that, even if they did destroy certain files and hard drives, they did so before Judge Anderson signed the Preservation Order; therefore they cannot be subject to sanctions under federal Rule of Civil Procedure 37.

I. The Court's Authority to Sanction

*4 While sanctions under Federal Rule of Civil Procedure 37 are limited to instances of a party violating a court's order or discovery ruling (and courts have interpreted the term “order” broadly), a court's inherent authority to sanction is not so limited. See Larson v. Bank One Corp., No. 00 C 2100, 2005 WL 4652509, at *8 (N.D.Il. Aug. 18, 2005) (citing Barnhill v. United States, 11 F.3d 1360, 1367 (7th Cir. 1993)). “The court has the inherent authority to sanction a party for misconduct, including prelitigation spoliation, in order to protect the integrity of the judicial system and prevent abuses of the judicial process.” Smith v. Borg-Warner Automotive Diversified Transmissions Products Corp., NO. IP 98-1609-C-T/G, 2000 WL 1006619, at *6 (S.D. Ind. July 19, 2000)(emphasis added) (citing Chambers v. NASCO, Inc., 501 U.S. 32, 45-46 (1991) (federal courts' authority to sanction bad faith conduct is both statutory and inherent)).

Courts have broad discretion in sanctioning a party for destroying evidence, and the type of sanction administered depends upon the unique factual circumstances presented. Nat'l Hockey League v. Metro. Hockey Club, Inc., 427 U.S. 639, 642 (1976). The Court must take care to ensure that the sanction be proportionate to the offending conduct. United States v. Golden Elevator, Inc., 27 F.3d 301, 303 (7th Cir. 1994). Courts may dismiss a case or enter a default judgment “for discovery violations or bad faith conduct in litigation under Federal Rule of Civil Procedure 37 or under the Inherent authority of the district court,” Greviskes v. Universities Research Assoc., Inc., 417 F.3d 752, 758 (7th Cir. 2005) (emphasis added) (upholding dismissal sanction even though offending plaintiff had not technically violated a court order.) However, “[t]he inherent authority to dismiss should be used ‘only when there is a record of delay [or] contumacious conduct .... In deciding what measure of sanctions to impose, the district court should consider the egregiousness of the conduct in question in relation to all aspects of the judicial process.” Greviskes, 417 F.3d at 759 (quoting Dotson v. Bravo, 321 F.3d 663, 667 (7th Cir. 2003)).

A court need not impose the least drastic sanction, or fire a “warning shot” prior to imposing a default sanction, Hal Commodity Cycles Mgmt. Co. v. Kirsch, 825 F.2d 1136, 1139 (7th Cir. 1987). However, a default judgment should only be imposed in extreme situations “where there is clear and convincing evidence of willfulness, bad faith, or fault by the noncomplying party.” Krumwiede v. Brighton Associates, L.L.C., No. 05 C 3003, 2006 WL 1308629, at * 9 (N.D. Ill. May 8, 2006) (citing Maynard v. Nygren, 332 F.3d 462, 468 (7th Cir. 2003)). Default judgment is appropriate only if a “reasonable jurist, apprised of all the circumstances, would have chosen [dismissal] as proportionate to the infraction.” Salgado v. General Motors Corp., 150 F.3d 735, 740 (7th Cir. 1998).

Less draconian sanctions include giving a spoliation or adverse inference instruction to the jury. Borg-Warner Automotive, 2000 WL 1006619, at *7. “ ‘[B]ad faith destruction of a document relevant to proof of an issue at trial gives rise to a strong inference that production of the document would have been unfavorable to the party responsible for its destruction.’ ” Id. (quoting Coates v. Johnson & Johnson, 756 F.2d 524, 551 (7th Cir. 1985)). The instruction is appropriate even if relevant evidence was destroyed before a lawsuit was filed, if the potential for future litigation was foreseeable. Blinzler v. Marriott Int'l, 81 F.3d 1148, 1159 (1st Cir. 1996) (“When the evidence indicates that a party is aware of circumstances that are likely to give rise to future litigation and yet destroys potentially relevant records without particularized inquiry, a factfinder may reasonably infer that the party probably did so because the records would harm its case.”)

*5 Several courts have dismissed cases as a sanction for spoliation of evidence. See, e.g.[6], China Ocean Shipping Co. v. Simone Metals Inc., No. 97 C 2694, 1999 WL 966443 (N.D. Ill. Sept. 30, 1999). Indeed, in China Ocean, Chief Judge Holderman dismissed a case with prejudice where the plaintiff failed to preserve critical evidence within its possession and control, even though the evidence had been destroyed prior to the filing of the lawsuit. Judge Holderman noted that a party has a duty to preserve “any relevant evidence over which the nonpreserving entity had control and could reasonably foresee was material to a potential legal action.” Id. 1999 WL 966443 at *3.

However, as Judge Anderson has noted, default is not appropriate where the innocent party can nevertheless present evidence on the merits and a lesser sanction can ameliorate the resulting prejudice. In re Old Banc One Shareholders Securities Litigation, No. 00 C 2100, 2005 WL 3372783, at. *5 (N.D. Ill. Dec. 8, 2005). The sanctioning court's decision should be informed by the weight of evidence demonstrating the breach of a duty to preserve; the level of culpability for the breach; and the prejudice suffered by the party impacted by the spoliation. Danis v. USN Communications, Inc. No. 98 C 7482, 2000 WL 1694325, at *31 (N.D. Ill. Oct. 23, 2000). Before examining these three principles, the Court will discuss what it deems to be the key evidence in this case.

II. The Evidence

1. ValuePart's Forensic Investigation

ValuePart began its forensic investigation by hiring Smart and Associates, LLP in January 2006. Mr. Aberman, of Smart and Associates, conducted an extensive investigation and submitted three affidavits in support of ValuePart's spoliation claim.

A. The April 26, 2006 Affidavit

Mr. Aberman reviewed email boxes for both Mr. Clemens and Ms. Murphy, Because their ValuePart laptops had been replaced (Mr. Clemens' laptop) or substantially cleaned out (Ms. Murphy's laptop), Mr. Aberman reviewed their email activity via two sources: ValuePart's email backup tapes from December 5, 2005, and a backup CD from Marilyn Hilb that was produced on March 23, 2006. Mr. Aberman found 30 emails that plaintiff's counsel deemed relevant to the issues raised in this litigation-emails that Ms. Murphy had deleted and Mr. Clemens had effectively destroyed by switching out his hard drive. Mr. Aberman also found evidence that both Mr. Clemens and Ms. Murphy had substantially reduced their email boxes after December 5, 2005. Mr. Aberman also found that Mark Krummel[7] had changed the default deletion/saving settings located on the ValuePart server after December 5, 2005, resulting in information being retained for a shorter period of time.

Because BCWipe had not been run on Mr. Clemens' or Ms. Murphy's ValuePart laptops, Mr. Aberman was able to conduct a forensic investigation on those laptops - though the investigation was hindered by the fact that the harddrive on Mr. Clemens' laptop had been replaced on December 14, 2006. Mr. Aberman took forensic images of Mr. Clemens' and Ms. Murphy's ValuePart laptops on February 25, 2006 and on Mar. 15, 2006, respectively. Despite the fact that Mr. Clemens' harddrive was new, Mr. Aberman found that., between December 15 and 16, 2005, Mr. Clemens deleted approximately 900 files containing the following extensions: .doc, .pdf, .ppt, .rft, .txt, .xls, and .zip Ms. Murphy had deleted approximately 600 files containing one of the above listed extensions, between December 7, 2005 and January 17, 2005. Ms. Murphy's recycle bin indicated that she had deleted a number of documents relating to or referencing ITR's set up; a Nov. 2005 presentation to Massimo Galassini, ITR North America, ITR's business plan, ValuePart Inc.'s 2005 Sales Final, pricing, and other apparently relevant files.

*6 Mr. Aberman also stated that Ms. Murphy either created or attempted to create a CD containing ValuePart's vendor information on or about December 21, 2005, just days before she resigned. In addition, Mr. Aberman found that ITR and ValuePart files, including its “VPI ITM Price List November 2005” were housed on an external USB drive, and that Defendants did not produce the USB drives.

Finally, Mr. Aberman discovered numerous remote access entries from Ms. Murphy's laptop to Valuepart's network that appeared between January 2, 2006 and January 11, 2006. It appears that Ms. Murphy's ValuePart laptop utilized a VPN tunnel to log onto the ValuePart network during this time period.

B. The June 12, 2006 Affidavit

Mr. Aberman conducted a forensic analysis of Ms. Murphy's ValuePart laptop and concluded that someone had used it to log onto ValuePart's network several times between January 11 and January 27, 2006. The person logging on to the network not only used Ms. Murphy's laptop, but used Ms. Murphy's ValuePart user ID as well. Although Mr. Krummel testified that he was the one using Ms. Murphy's laptop to connect to ValuePart's network in January, he did not explain why he used Ms. Murphy's password instead of his own.

Mr. Aberman's affidavit then notes that Defendants refused to produce requested external drives, external storage devices, and Mr. Clemens' Blackberry, with the exception of two tardily produced thumb drives. Mr. Aberman also notes that, on May 26, 2006, Defendants' computer consultant, Navigant Consulting, informed Mr. Aberman that all of ITR's desktop computers contained 120 GB hard drives, and that he had personally inspected the computers to make this determination. However, when Mr. Aberman inspected those same desktop computers on June 8, 2006, the computers had only 80 GB hard drives.

C. The July 18, 2006 Affidavit

After reviewing the hard drive from Mr. Clemens' ValuePart computer, Mr. Aberman discovered that the hard drive had a date stamp of October 2005. According to Hitachi, the manufacturer of the drive, the date stamp meant that. Hitachi had manufactured the drive in October of 2005, then sold it to a distributor, who in turn sold it to a vendor, who made it available for sale to a consumer. Hitachi further assisted Mr. Aberman in learning that the hard drive had been purchased on or after November 12, 2005. Mr. Aberman also concluded that the new, clean hard drive's operating system had been installed on Mr. Clemens' laptop on December 14, 2005 - less than ten days before Mr. Clemens resigned from ValuePart. At his deposition, Mark Krummel admitted that he physically destroyed Mr. Clemens' old hard drive, preventing anyone from reconstructing the data or information contained therein.

Coincidentally, (as Defendants would have the Court believe), Mr. Krummel's ValuePart laptop also had had a new hard drive installed shortly before leaving ValuePart. Mr. Krummel's harddrive had a date stamp of December 2005, was purchased on or after December 17, 2005, and was fully installed on or before February 5, 2006. Mr. Krummel admits that he also destroyed his old harddrive, making it physically impossible to determine what may have been on, copied from, or erased from the drives.

After conducting forensic investigations of all of the former ValuePart executives' new ITR computers, Mr. Aberman concluded that a Maxtor One Touch external drive (the “Maxtor”) was connected to Ms. Murphy's new computer on March 19, 2006, and to Mr. Krummel's new computer on January 24, 2006. The same Maxtor had been connected to Ms. Murphy's ValuePart laptop on January 24, 2006. Mr. Aberman does not conclusively state that documents were transferred from these computers through to the Maxtor drive.

*7 Mr. Aberman noted that Mr. Clemens' ITR computer profile had been created on December 21, 2005 - two days before he resigned from ValuePart. Mr. Aberman stated that “it appears” that Mr. Clemens' ITR computer had been wiped with a software known as BC Wipe on May 18 and 19, 2006, and that the BC Wipe program had been uninstalled on May 19, 2006 - shortly before Defendants produced the computer to Mr. Aberman for inspection. Similarly, Mr. Aberman noted that it appeared that BC Wipe had been run on Ms. Murphy's and Mr. Krummel's ITR computer as late as May 19, 2006 and June 5, 2006[8], respectively. In addition, a review of Ms. Murphy's ITR link file data indicated evidence of a removable drive being connected and utilized, and further inspection revealed that this drive contained files of, apparently, Valuepart vendor information. Because wiping software had been utilized, Mr. Aberman stated that he had little confidence that the handful of incriminating files he did locate was a complete list.

Mr. Aberman also examined two USB thumb drive images, and concluded that BCWipe had been run on those as well. Mr. Aberman noted that there was no remaining evidence of any work product, such as Word, Excel, PowerPoint, or other text files on the drives - files that one would ordinarily expect to find.

Mr. Aberman was also given access to Jim Delaney's ITR computer. Mr. Delaney's computer clearly had BCWipe installed, and had access to BCWipe through May 18, 2006. Mr. Aberman noted that the usual link files to external media that one would expect to see on Mr. Delaney's laptop were nonexistent, further supporting Mr. Aberman's conclusion that the laptop had been recently wiped.

2. Defendants' Expert Rebuttal

Although they were free to do so, Defendants decided not to conduct their own, independent forensic investigation of their laptop and desktop computers. Instead, Defendants hired senior forensic examiner Scott Jones, of Forenscion, Inc. (“Forenscion”) to critique Mr. Aberman's curriculum vitae, affidavits, and deposition testimony.

Mr. Jones begins by attacking Mr. Aberman's credentials, noting: that 1) Mr. Aberman possesses no graduate or undergraduate degree in any computer centric discipline, his bachelor's degree is in accounting; 2) Mr. Aberman's sole computer certification, the Certified Computer Crime Investigator designation, does not demonstrate any degree of computer knowledge or technical ability; and 3) Mr. Aberman has not successfully passed any computer examination or practical examination to earn the Encase Certified Examiner designation (“EnCE”). Notably, these purported educational deficiencies have not prevented the FBI, the SEC and state and local government law enforcement agencies from hiring Mr. Aberman for his computer forensic expertise.

Next, Mr. Jones takes issue with the precision with which Mr. Aberman conducted his investigation. For example, Mr. Jones complains that, although Mr. Aberman testified that he selected the option “delete with wiping” when testing BC Wipe software, Mr. Aberman failed to disclose what other options were available and whether he tested those options as well. Mr. Aberman failed to disclose whether he created any sort of control group against which to compare his results, failed to control his variables, and failed to disclose whether he was able to replicate his test results. Mr. Jones concludes that these alleged missteps evidenced a conclusion-based, as opposed to a hypothesis-based investigation. The Court finds that Mr. Jones' conclusion requires quite a leap, but his comments are duly noted.

Mr. Jones finally evaluates Mr. Aberman's specific conclusions. First, Mr. Jones notes that Mr. Aberman makes inappropriate presumptions; for example, Mr. Jones contends that it is inappropriate to presume that. Shannon Murphy actually ran BCWipe, simply because an examination of her laptop computer reveals that BCWipe was installed and utilized on that computer.

*8 Next, Mr. Jones makes much of the fact that Mr. Aberman failed to disclose whether he was able to determine if any of the usage of BCWipe was caused by an automated system process, or by a specific user, because this speaks to intent. As is discussed more thoroughly below, whether Mr. Clemens or one of his employees ran BCWipe is irrelevant, as Mr. Clemens and Ms. Murphy had a duty to ensure that the documents, emails, etc. on their laptops, desktops, and other electronic devices, were preserved.

Mr. Jones then notes that BCWipe existed on all four of the ITR laptop computers since as far back as February 2006. Mr. Jones again offers this insight to chip away at any inference of destructive intent - ie, Defendants allege that because BCWipe had been installed before this lawsuit was actually filed, this supports their claim that BCWipe was used as an integral part of their computer security program, and not as an eleventh hour attempt to delete evidence of wrongdoing. First, the fact that BCWipe was on the computers arguably prior to Defendants' clear obligation to preserve evidence does nothing to salvage Defendants' position, since they failed to remove it once their obligation to preserve arose. In addition, Mr. Jones conceded that neither he nor any forensic expert he has known has ever recommended using wiper software, such as BC Wipe, as part of a virus protection program or for any purpose other than to produce a “blank slate,” - ie., something he would recommend if a person were considering donating their computer to charity, for example. Jones Dept at pp. 61-65, and 70. And both Mr. Jones and Mr. Krummel concede that Jetico does not recommend using BCWipe for the purpose Defendants claim to have utilized the software.

Mr. Jones argues that Mr. Aberman's conclusion that BCWipe was used on Mr. Krummel's laptop on June 5, 2006 failed to account for the fact that the “Last Accessed” date (which Mr. Aberman relied upon in concluding that BCWipe was used on June 5th) could have been altered by system processes such as antivirus software or backup software processes. The Court acknowledges that, because various system security or administrative programs can alter the Last Accessed date, Mr. Aberman's conclusion cannot be accepted as clear and convincing evidence that BCWipe was run on Mr. Krummel's computer on June 5, 2006. However, at his deposition, Mr. Krummel admitted that he routinely ran BCWipe on all of these ITR laptops in April and May of 2006, and that he allegedly stopped doing so on Monday, May 22, 2006, after he learned of Judge Anderson's preservation order (entered on May 19, 2006).

Mr. Jones claims that Mr. Aberman incorrectly applies the meaning of “Last Written” as it relates to settings found within the USBSTOR hardware registry, and erroneously concludes that it is evidence that information was transferred to an external storage device. This is particularly relevant, because the evidence shows that Ms. Murphy's ValuePart laptop was connected to an external drive on January 24, 2006– more than one month after she had resigned from ValuePart. Mr. Jones opines that the evidence actually shows that data was written to the internal hard drive for that laptop and not to the external device. As such, Mr. Jones concludes, Mr. Aberman's statements to the contrary demonstrate his incompetence as a computer forensic expert. However, Mr. Jones' affidavit does not preclude the possibility that data was also transferred to the external drive, and Plaintiff's counsel takes issue with Mr. Jones' characterization of Mr. Aberman's statement[9]. Notably, Mr. Jones does not dispute that an external drive was connected to Ms. Murphy's laptop on January 24, 2006, and neither he nor Defendants have offered a benign explanation as to why.

*9 Finally, Mr. Jones claims that the email that Mr. Aberman received from Jetico on July 27, 2006, when read in its entirety, further undermines Mr. Aberman's credibility. While Mr. Aberman concluded that Mr. Clemens and Ms. Murphy deleted files based on the number of files created by BCWipe, the Jetico email states that “the number of files created by BCWipe is not exactly the number of deleted files.” Mr. Jones ignores Jetico's later statement that, although there is not a perfect one to one correlation between files created and the number of deleted files, the correlation is very close.

Mr. Jones further notes that, in the email, the Jetico representative could not be sure that the “entry modified” date is the date of wiping. The Court agrees with Mr. Jones' conclusion that the “entry modified” date does not provide conclusive evidence of when BCWipe was used, Mr. Krummel's deposition testimony, however, does provide such evidence.

3, Mark Krummel's Deposition Testimony

Perhaps the most damaging evidence in the case is Mr. Krummel's deposition testimony.

A. Mr. Krummel Was Secretly Assisting Mr. Clemens in Setting Up ITR.

At his deposition, Mr. Krummel admitted that, while he was employed by ValuePart, he assisted Mr. Clemens in setting up the network and laptop computers for ITR. In November of 2005, Mr. Krummel ordered six laptop computers for ITR, and had them shipped to the home of Clarence Harding, a ValuePart client residing in Indiana. Beginning in December of 2005, Mr. Krummel set up ITR's network and at least three of the laptop computers. Mr. Krummel admits that he told no one at ValuePart that he was performing these services on behalf of Mr. Clemens and ITR. In fact, Mr. Krummel denies that he was working for ITR at anytime prior to February 21, 2006, insisting that he was “just helping a friend” a statement that is, as discussed above, difficult to accept. Notably, Mr. Krummel's friendship with Brett Clemens proved to be a two-way street: in late January or early February of 2006, Mr. Clemens suggested that Mr. Krummel might require legal advice if he were to accept Mr. Farquhar's invitation to stay on with ValuePart, and referred Mr. Krummel to his attorney, Katherine Schmidt. Ms. Schmidt advised Mr. Krummel and drafted a legal release for him to present to Mr. Farquhar. Mr. Krummel admits that he never paid Ms. Schmidt for her services, and does not know whether someone else paid her on his behalf.

B. Mr. Krummel destroyed hardware that likely contained relevant evidence.

Mark Krummel testified that, in October or November of 2005, Chris Gilleo's computer motherboard and harddrive were malfunctioning, so he removed them and swapped them out with new parts. Mr. Krummel claims that, without ValuePart's permission, he either physically destroyed these computer parts with a hammer, or simply left them lying about somewhere in ValuePart's offices. Notably, no one at ValuePart has reported finding Chris' Gilleo's harddrive or motherboard.

Mr. Krummel further admitted that he “swapped out” Mr. Clemens' harddrive in early to mid-December 2000. Mr. Krummel claims that Mr. Clemens' hard drive was also malfunctioning. And while he was uncertain of the fate of Mr. Gilleo's harddrive, he clearly remembered destroying Mr. Clemens's harddrive - once again, without ValuePart's permission. Mr. Krummel also claimed that his own laptop was malfunctioning in January of 2006, and that he swapped out and destroyed his old harddrive after he had resigned from ValuePart, but before returning his laptop to ValuePart in February 2006.

Finally, Mr. Krummel admitted that “at sometime prior to May 19,” - the day that Judge Anderson signed the Preservation Order - he took a hammer to a ValuePart Maxtor Drive and destroyed it. This is the same ValuePart Maxtor Drive that was attached to the ITR laptops for unstated purposes. This revelation particularly irked Plaintiff, because Defendants had led Plaintiff on a wild goose chase: Defendants had previously stated that the Maxtor drive was likely lying about somewhere in ValuePart's facilities, and suggested that ValuePart ask its employees about its whereabouts. Mr. Krummel eventually admitted to destroying the equipment, but claims that he did so for ValuePart's own protection, stating that he was able to “throw it away with a clear conscience that the data [sic] no one is ever going to go through the trouble to restore.” Krummel Dep. at 172, 177. Although Mr. Krummel claims that ValuePart already had the information stored on the destroyed Maxtor drive, -- a statement only as reliable as Defendants' tarnished credibility - he offers no explanation as to why he believed he was entitled to take ValuePart's Maxtor drive to ITR in the first instance and then destroy it without ValuePart's permission. Plaintiff is now unable to independently verify what evidence may have been on the Maxtor drive, which had been connected to Ms. Murphy's and Mr. Krummel's computers.

*10 C. Mr. Krummel installed and ran BCWipe on ITR's laptops in the Spring of 2006.

Mr. Krummel testified that he installed BCWipe software on all of the ITR laptops in February of 2006. He claimed that he installed it as part of a proactive, computer security program. He claims that he ran it “routinely” In March, April and May of 2006 on all deleted files, and that he did not inform Brett Clemens, Shannon Murphy, or any of the ITR employees that he had installed or was running BCWipe. Mr. Krummel conceded that he ran BCWipe on May 18, 2006, after this lawsuit was filed. Mr. Krummel explained that he uninstalled BCWipe from all of the ITR laptops, except his own, right after he learned that Judge Anderson had signed the May 19, 2006 Preservation Order. He left BCWipe on his laptop, because he knew that he, unlike the other less computer-savvy workers at ITR, would not accidentally launch the program.

Mr. Krummel admitted that BCWipe is not marketed to be used in the manner he used it, and he could not produce any authority that recommended using BCWipe software proactively[10], as opposed to in response to an actual malware infestation. He conceded that the ITR laptops were brand new, and showed no signs of infestation or viruses. He stubbornly admitted that BCWipe is not labeled for virus, rookit or spyware detection, and that he has never recovered information from a drive that has been wiped with BCWipe software. Mr. Krummel did not deny wiping the two key USB thumb drives that Defendants had attached to both their ValuePart and later ITR laptop computers.

III. Defendants' Bad Faith Breaches of Their Duty To Preserve Evidence Prejudiced Plaintiff

After reviewing this key evidence, in conjunction with the other evidence presented by the parties, the Court readily concludes that Defendants violated their duty to preserve evidence, that they did so willfully and in bad faith, and that their spoliation resulted in prejudice to Plaintiff.

1. Duty to Preserve

Parties in lititgation have a fundamental duty to preserve evidence “over which the non-preserving entity had control and reasonably knew or could reasonably foresee was material to a potential legal action.” China Ocean Shipping (Group) Co. v. Simone Metals, Inc., No. 97 C 2694, 1999 WL 966443, at *3 (N.D. Ill. Sept. 30, 1999). “The obligation to retain discoverable materials is an affirmative one; it requires that the agency or corporate officers having notice of discovery obligations communicate those obligations to employees in possession of discoverable materials.” Nat'l Assoc. Of Radiation Survivors v. Turnage, 115 F.R.D. 543, 557-58 (N.D. Cal. 1987).

*11 In this case, Defendants' obligation to preserve evidence began, at the very latest on March 21 2006, when Plaintiff's counsel sent Defendants a thorough letter explicitly detailing Defendants' obligation to preserve evidence of any kind that might be relevant to this case. That obligation likely arose even earlier, on January 27, 2006, when Plaintiff directed Mr. Clemens to adhere to the terms of his Employment, Confidentiality, and Non-Competition Agreement with ValuePart and to preserve all documents and data in his possession. Prior to that, however, Defendants' obligations were less apparent. While the Court is convinced that Defendants intentionally and in bad faith deleted hundreds and perhaps thousands of files from Mr. Clemens' and Ms. Murphy's ValuePart laptop computers, and intentionally destroyed Messrs. Clemens' and Krummel's hard drives in an effort to cover their tracks, their obligation to preserve this evidence is less than clear.

What is undisputed and perfectly apparent, however, is that Defendants repeatedly ran BCWipe on all of the ITR laptops and destroyed ValuePart's Maxtor drive long after their obligation to preserve that data arose. Mr. Krummel admitted that he ran BCWipe routinely, and this process effectively wiped away any trace of data, business records, email and other correspondence that had been relegated to the computers' freespacc. Defendants also do not deny wiping two key thumb drives that were used on both their Valuepart and ITR laptop computers, thereby destroying any evidence contained therein.

Defendants cannot hide behind Mr. Krummel's professed - and highly incredulous - ignorance of ITR's obligation to preserve this information. “Once a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a ‘litigation hold’ to ensure the preservation of relevant documents.” Zubulake v. UBS Warburg L.L.C., 220 F.R.D. 212, 216 (S.D.N.Y. 2003) (noting that the duty to preserve arises as soon as a party has notice that the evidence is relevant to present or future litigation.) Thus, even if Mr. Krummel's statement were to be believed, it does not relieve Mr. Clemens, Ms. Murphy, and ITR of their responsibility to revamp ITR's alleged routine document destruction policy and to inform their employees of the necessary change. See Turnage, 115 F.R.D. at 557-58. At best, Defendants blatantly ignored their duty to preserve this evidence.

2. Bad Faith, Willfulness, or Fault

“Because a default judgment deprives a party of a hearing on the merits, the harsh nature of this sanction should usually be employed only in extreme situations where there is evidence of wilfulness, bad faith, or fault by the noncomplying party .... Although willfulness and bad faith are associated with conduct that is intentional or reckless, the same is not true for fault. Fault does not speak to the noncomplying party's disposition at all, but rather only describes the reasonableness of the conduct.” Danis, 2000 WL 1694325, at *33. “The inherent authority to dismiss should be used only when there is a record of delay or contumacious conduct.” Greviskes, 417 F.3d at 759.

In this case, the Court is of the opinion that the evidence demonstrates that Defendants repeatedly acted intentionally and in bad faith. The evidence that Plaintiff was able to recover from Mr. Clemens' and Ms. Murphy's ValuePart laptops, and from ValuePart's Dec. 5, 2005 email backup, demonstrate that Mr. Clemens and Ms. Murphy deleted incriminating emails about their efforts to get ITR up and running while they were employed by ValuePart, and that they transferred sensitive ValuePart pricing, sales, and customer information in November and December of 2005 and January of 2006.[11] In addition, Mr. Aberman's investigation revealed that Mr. Clemens and Ms. Murphy deleted hundreds of documents from their ValuePart laptops - documents relating to ITR's setup and ValuePart's pricing and financial strategies - in the days and weeks before they resigned.[12] Mr. Krummel apparently deleted more sensitive documents from Ms. Murphy's laptop in January of 2006, after Ms. Murphy resigned.[13] While the Court does not recommend sanctioning Defendants for these activities, per se, as they fall beyond the scope of Defendants' duty to preserve, they do evidence Defendants' intent to delete incriminating evidence that they used ValuePart's confidential and proprietary information to set. up ITR while employed by ValuePart.

*12 Similarly, the Court is of the opinion that Mr. Krummel's decision to run BCWipe repeatedly, on new laptop computers that showed no signs of infestation, was not only unreasonable, but clearly evidences bad faith. The proprietors of BCWipe do not recommend using the software in this manner, and explicitly state that the software will wipe all traces of the erased data and documents. Mr. Krummel's attempts to produce expert opinion supporting his actions were unavailing; Mr. Krummel produced no authority to support using the software proactively on new laptops. Notably, Mr. Krummel had not employed a similar security routine for the laptop computers while he was IT Manager at ValuePart - whose computers were older and, apparently, more prone to attacks. Even Defendants' expert, Scott Jones, testified that he has never recommended nor known anyone to recommend using BCWipe as a proactive security measure or for any other purpose than to attain a “blank slate.” To run such destructive software long after the duty to preserve arose clearly constitutes willfulness and bad faith.

Finally, Defendants' physical destruction of the Maxtor drive - property that belonged to ValuePart and was attached to Mr. Clemens', Ms. Murphy's, and Mr. Krummel's computers for unstated purposes under the guise of protecting ValuePart, is outrageous. Mr. Krummel destroyed the drive “sometime before” May 19, 2006, likely after Defendants' obligation to preserve the evidence arose, and is just another example of Defendants' efforts to hide evidence of their wrongdoing.

3. Prejudice

“A party suffers prejudice due to spoliation of evidence when the lost evidence prevents the aggrieved party from using evidence essential to his underlying claim.” Krumwiede v. Brighton Assocs. Inc., No. 05 C 3003, 2006 WL 1308629, at *10 (N.D. Ill. May 8, 2006). The prejudice suffered by Plaintiff is apparent. Defendants used virtually every means available to them to destroy evidence that they were usurping ValuePart's business opportunities, breaching their fiduciary duties, stealing ValuePart's proprietary information and soliciting ValuePart's customers and employees, both during and immediately after their employment with ValuePart. The evidence shows that Defendants erased email and documents, destroyed harddrives, destroyed external drives, and, in so doing, destroyed the metadata that would have at least provided evidence of what had been present on- and was then deleted from -- their computers and harddrives.

Defendants' activities have severely hampered Plaintiff's ability to reconstruct those documents, letters, emails, and data. At this early stage of the proceedings, Plaintiff has been able to rely only upon the December 5, 2005 email backup-which likely exists only because it escaped Mr. Krummel's notice - and Mr. Aberman's forensic investigation, concluding primarily that Defendants have engaged in a campaign to destroy evidence. As a result of Defendants' irreversible actions, Plaintiff may no longer rely on the primary sources of evidence on its claims of breach of fiduciary duty, unlawful solicitation, and theft of proprietary and confidential information.

“Where one party wrongfully denies another the evidence necessary to establish a fact in dispute, the court must draw the strongest allowable inference in favor of the aggrieved party.” Turnage, 115 F.R.D. at 557. “Obviously, the relevance of and resulting prejudice from destruction of documents cannot be clearly ascertained because the documents no longer exist. Under the circumstances, [the culpable party] can hardly assert any presumption of irrelevance as to the destroyed documents.” Alexander v. National Farmers Org., 687 F.2d 1173, 1205 (8th Cir. 1982).

Defendants' conduct is nothing less than an assault on the integrity of this judicial proceeding, and makes a mockery of the parties' obligations under the discovery rules-enacted to ensure that judges and juries will have the information they need to bring fair resolutions to civil disputes. Defendants should not be rewarded for deleting and destroying evidence of their wrongdoing before they were formally ordered to preserve it, when the evidence clearly shows that they did so knowingly and intentionally. Defendants have compounded their insubordination by misleading Plaintiff as to the whereabouts of computer harddrives and external drives that Defendants had, in fact, destroyed. See Greviskes, 417 F.3d at759.

*13 To allow Defendants to escape sanctions, simply because they had the foresight to act so thoroughly and (largely) before Plaintiff was able to get to the courthouse, would only serve to encourage others to act in this unscrupulous manner. There is no question that Defendants acted intentionally to eliminate the most damaging source of evidence of their wrongdoing, after their obligation to preserve this evidence arose, and to the prejudice of Plaintiff.

While the Court acknowledges that the most severe sanction - default- is arguably warranted in this case, it also recognizes the reluctance of courts to deprive a party of its day in court, if lesser sanctions are sufficient to remedy the resulting prejudice. This is particularly true where spoliation has not foreclosed the non-offending party's ability to support its position. For example, in China Ocean Shipping, the prelitigation destruction of a railroad container warranted default, because one of the party's defenses revolved around the possibility that the container itself was defective. China Ocean Shipping (Group) Company v. Simone Metals Inc., No. 97 C 2694, 1999 WL 966443, at * 3-4 (N.D. Ill. Sept. 30, 1999). Without the container, the defendant had no means of proving that it was the container's faulty construction, and not the defendant's packaging, bracing and/or loading of scrap metal into the container, that caused the scrap metal to break through the container floor and derail the train. Judge Holderman concluded that “no sanction short of dismissal ... would put [the non-offending defendant] in their rightful position since they would be unable to properly defend against” the claims against them. Id. at *4.

Conversely, in Old Banc One Shareholders Securities Litigation, Judge Anderson ruled that the defendants' failure to retain relevant documents did not warrant default, because “[t]his is not a case in which a party is prevented from presenting its case due to missing evidence.” 2005 WL 3372783, at *5. The court conceded that the destruction would prevent the plaintiff's expert from precisely estimating how much the defendants had overstated their financial position prior to a merger. However, the court concluded that lesser sanctions - specifically, preventing the defendants from cross-examining the plaintiff's expert - would “ameliorate the prejudice suffered by Plaintiffs.” Id.

Similarly, in the instant case, Defendants' destruction of evidence hinders, but will not prevent Plaintiff from proving its case on the merits. Plaintiff has already uncovered incriminating emails from the December 5, 2005 backup tape. The emails, such as those detailing Mr. Clemens' and Ms. Murphy's attempts to secure ITR facilities and a home in Indiana while employed by ValuePart, are significant not only because they evidence Defendants' wrongdoing, but also because the emails were wiped from (or were otherwise destroyed) Mr. Clemens' and Ms. Murphy's laptops before they returned them to ValuePart, further evidencing their bad intent. In addition, there may be discoverable evidence of communications between Defendants and Mr. Galassini on Mr. Galassini's computer systems or in his business files. The Realtors working with Defendants in Indiana, and former ValuePart client Clarence Harding (who received the Dell computers on behalf of Mr. Clemens) should prove to be useful sources of information regarding Mr. Clemens' and Ms. Murphy's activities while they were still employed at ValuePart. ValuePart's business records, and receipts indicating that Mr. Clemens obtained reimbursement from ValuePart for expenses and entertainment[14] relating to his ITR set-up efforts also support Plaintiff's claims. The ITR harddrives should also contain relevent information regarding ITR's business practices. There is no evidence thus far that the ITR harddrives have been wiped, however, the preliminary evidence could suggest that the harddrives may have been replaced. Plaintiff still has the opportunity to depose the key players in this case, including Mr. Clemens and Ms. Murphy, as well as to examine both its own and ITR's customers about whether and/or how they have been approached by Mr. Clemens and ITR.

*14 To account for the diminished pool of evidence, the Court recommends giving the jury a spoliation/adverse inference instruction. An adverse inference instruction, explaining to the jury that Defendants destroyed correspondence, documents, data, and computer equipment to hide evidence that was adverse to their defense, would likely alleviate much of the prejudice caused by Defendants' conduct. Therefore, the Court recommends instructing the jury to draw an adverse inference from Defendants' intentional destruction of evidence.

In addition, the Court is of the opinion that Plaintiff is entitled to an award of fees and costs relating to its Motion for Sanctions, and also for all of Mr. Aberman's and Smart and Associates' fees, as these expenses were incurred as a direct result of Defendants' misconduct.

IV. The Krummel Release

In a last ditch effort to avoid responsibility for their wrongdoing, Defendants attempt to lay much of the blame at Mr. Krummel's feet, and then hide behind the Release that ValuePart executed on Mr. Krummel's behalf. Confronted with the mass exodus of executive and key employees, Mr. Farquhar asked Mr. Krummel to stay on after he announced his resignation on January 12, 2006. With advice from Mr. Clemens' attorney, Mr. Krummel agreed to delay his departure, on the condition that Mr. Farquhar execute a formal agreement, releasing Mr. Krummel from any liability for any claims arising out of his employment with ValuePart. Notably, Mr. Farquhar was unaware of the extent of Mr. Krummel's involvement with ITR at that time. Defendants now claim that, pursuant to the decisions in Holcomb v. Flavin, 34 Ill.2d 558 (1966) and Golden v. BarenBorg, 850 F. Supp. 716 (N.D. Ill. 1994), Mr. Krummel's Release shields them from liability in this suit.

Even if the Release was valid, and that is questionable, neither Holcomb v. Flavin, nor Golden v. BarenBorg, stand for the proposition that a covenant not to sue an agent releases a deliberately-concealed master from his or her own liability. Rather, the releases in these cases were effective where “the liability of the master or principal [was] merely derivative or secondary.” Holcomb, 34 Ill.2d at 565. In the instant case, Defendants' liability stems from their own wrongdoing and their own failure to institute a policy to ensure the preservation of relevant evidence after their duty to preserve arose. “The obligation to retain discoverable materials is an affirmative one; it requires that the agency or corporate officers having notice of discovery obligations communicate those obligations to employees in possession of discoverable materials.” Turnage, 115 F.R.D. at 557–58. Mr. Krummel did not testify - nor is there any evidence to suggest that he acted as a rogue employee in contravention of his superiors' orders to preserve documents. To the contrary, Defendants never made any attempt to preserve relevant evidence in this case; Mr. Krummel's activities were perfectly in keeping with Defendants' months long practice of destroying evidence of wrongdoing. Therefore, because Defendants are directly and independently liable for their own conduct, as well as for failing to properly inform their employees, the Release that ValuePart executed for Mr. Krummel's benefit is irrelevant.

CONCLUSION

For the reasons stated above, this Court recommends Granting, in part, Plaintiff's Motion for Sanctions. The Court does not recommend that an order of default be entered against Defendants, but instead recommends that the jury be given an adverse inference instruction at trial. Furthermore, this Court recommends that Plaintiff be awarded its reasonable fees and costs in bringing this Motion, and the fees billed to Plaintiff by Smart and Associates,

*15 RESPECTFULLY SUBMITTED:

Counsel have ten days from the date of service to file objections to this Report and Recommendation with the Honorable Wayne R. Anderson. See Fed. R. Civ. P. 72(b); 28 U.S.C. 636(b)(1). Failure to object constitutes a waiver of the right to appeal. Egert v. Connecticut General Life Ins. Co., 900 F.2d 1032, 1039 (7th Cir. 1990).