Jury verdict is good news for providers of storage solutions

By Joel Shore, ITworld.com |  Business

Storage vendors agree that big changes are coming.

I recently moderated a panel at the C3 Expo show in New York about storage trends; officials from EMC, Storability, and Clover Communications each provided their insight.

Though each company has its own agenda to pitch to an audience, they all agree that it's not really about storage. No. It's really all about retrieval. And fast retrieval at that.

As I see it, there are three, and possibly more kinds of data retrieval: enterprise-wide disaster recovery, individual user file or directory recovery, and court-mandated retrieval of specific documents.

It's the last one that has people talking.

As you probably know, a Florida jury recently ordered Wall St. investment house Morgan Stanley to pay $1.45 billion to financier Ronald Perelman in the bankruptcy case of appliance maker Sunbeam. In 1998, Perelman sold a company he owned, camping-gear maker Coleman, to Sunbeam for cash and stock. The problem was that Sunbeam may have been little more than a house of cards. Its problems eventually came to light and the value of Perelman's 14 million Sunbeam shares became nearly worthless. Sunbeam eventually filed for bankruptcy protection.

Perelman alleged that Morgan cost him millions by withholding information about Sunbeam's financial problems. Sunbeam was a client of Morgan. Not surprisingly, Morgan vigorously denies the allegation. And the cost keeps rising. On June 25, a jury in Florida raised the damage award to $1.58 billion.

But here's where Morgan got itself into real trouble. Because the company was unable to either find or quickly produce all the e-mails and other information demanded by the court, Judge Elizabeth Maass issued a default judgment ordering the jury to accept as fact that Morgan helped Sunbeam defraud Perelman. In other words, the jury was never allowed to vote on whether Perelman had been defrauded by Morgan. It was now simply a given that he was.

Morgan is appealing the judgment.

We're not talking about a few e-mail from a few months ago. We're not talking about a simple "the dog ate my homework" inability to produce the goods. According to Newsweek magazine, the court order involved "large numbers of e-mails going back nearly a decade."

What's bad news for Morgan Stanley is almost certain to be great news for solutions integrators.

Whatever you're already doing for clients in bolstering storage to comply with Sarbanes-Oxley or protect information to comply with HIPAA, there's likely much more to come. The storage vendors agree that there will probably be billions of dollars in new e-mail retention and retrieval costs.

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