A recent Delaware Court of Chancery decision confirms that discovery risk often begins long before a lawsuit is filed—and that modern messaging tools can turn a defensible case into a sanctions problem. In In re World Wrestling Entertainment, Inc. Merger Litigation, Consol. C.A. No. 2023-1166-JTL (Del. Ch. May 26, 2026), Vice Chancellor Laster found that a controlling stockholder and four senior executives spoliated evidence by failing to preserve Signal messages after receiving litigation holds—and, in the case of four of the five custodians, by affirmatively changing auto-delete settings to destruction periods measured in hours or less, wiping existing messages and ensuring future ones would vanish. 

The sanction was not a fee award. Shortly days before trial, the court ordered that five facts at the core of the plaintiffs' case—including that the buyer's promises of a post-merger role and of indemnification and assistance with a federal investigation influenced the controller's decision-making, and that the controller and a senior officer steered the sale process toward the buyer and away from other bidders—be presumed true, rebuttable only by clear and convincing evidence.  The trial never happened. That may be the real lesson: a well-timed spoliation ruling can decide a case otherwise headed to trial.

The duty arose before the hold. The most consequential holding has nothing to do with hold compliance. The defendants argued that no duty to preserve sale-process materials existed until the company circulated its sale-process hold in January 2023. The court disagreed: in M&A transactions, the duty to preserve can arise before any hold issues, because deal litigation is common enough that sophisticated parties should anticipate it.  On these facts, the duty was attached by August 31, 2022—nearly five months before the hold—once serious transaction discussions were underway.  Deal teams should assume the preservation clock starts when the discussions get serious, not when the legal department acts.

A legal hold is not self-executing. The company's holds were well drafted—they expressly covered texts and instant messages and warned custodians to address automatic deletion protocols.  Compliance, not drafting, failed. No custodian checked their settings; four shortened them, with changes clustering around a federal information request, the first merger meeting, and a boardroom dispute.  The court held that custodians cannot claim ignorance of auto-delete functions after receiving a hold—they must determine what compliance requires—and refused to credit ignorance testimony contradicted by metadata showing repeated setting changes.  Where custodians affirmatively shorten retention settings after preservation duties arise, the conduct is reckless even without direct proof of intent to destroy evidence. 

Volume is not a defense. The producing parties pointed to a massive record—the merged entity and buyer alone produced more than 37,000 documents. The court called the comparison “a denominator in search of a numerator”: no one can know how many messages were destroyed, and because deletion was selective, the most sensitive exchanges are likely the ones that are gone.  Once the moving party offers a plausible explanation of the lost material's relevance, the burden shifts to the spoliator to prove the loss was harmless—a burden the defendants could not carry given the timing of the deletions. 

The preventive program follows directly. Companies should decide, in writing, whether executives may conduct business on encrypted or ephemeral platforms and personal devices; if such tools are permitted, the company must be able to preserve, collect, and review those communications when litigation is reasonably anticipated. Holds should expressly cover texts, chat platforms, messaging apps, personal devices, and retention settings—and instruct custodians to disable auto-delete and disappearing-message functions immediately. Then compliance should be verified.

Key Takeaways

• Preservation duties can predate the hold notice. Deal activity, investigations, and government inquiries may trigger the duty months before counsel circulates a notice.
• A hold is notice, not preservation. The company must confirm custodians understand it, identify where responsive material lives, and verify that auto-delete and disappearing-message settings are actually disabled.
• Selective deletion defeats the volume defense. Producing tens of thousands of documents will not cure the loss of a decision-maker's candid channel during key events.
• Treat ephemeral messaging as discoverable ESI. If employees use it for business, assume it may need to be preserved.