Iron Mountain in Hot Water Again

Iron Mountain is being sued in a case that illustrates how destroying data can be a key part of managing it. (See State Fair Sues IMIM.)

The State Fair of Texas has petitioned Dallas County District Court to consider its motion for a jury trial involving eight employees of a Dallas-based Iron Mountain shredding facility and two local business owners. All are accused of illegally taking and reselling tickets to the 2004 State Fair that should have been shredded.

The fair, SFT as it's known as a nonprofit company, isn't your average country exhibition. Instead, it's reportedly the largest state fair in the U.S., taking place from the end of September to mid-October, and incorporating rides, games, animal shows and auctions, an automobile expo, and a college football game in the Dallas Cotton Bowl.

Some 3 million visitors use coupons every year to purchase rides, food, and other amenities from vendors at the fair. The coupons are coded and given serial numbers to indicate their age. Sponsors accept them as the fair's coin of realm and redeem them for cash at the end of the annual event.

If a few patrons manage not to use all their coupons, the SFT allows them to redeem them the following year. The rest of the year's unissued coupons are shredded as "dead wood." But in 2005, SFT found itself literally flooded with more than $1 million worth of old coupons -- far more than the amount for which it normally makes allowance.After local police looked into the matter, SFT hired investigators, and the fair claims to have traced the leftover coupons via serial number to boxes of unissued coupons from the previous year's fair -- coupons that SFT had hired Iron Mountain to shred. Instead of destroying the "dead wood," SFT alleges, Iron Mountain told SFT its shredders were temporarily out of commission. SFT says Iron Mountain employees took the coupons from boxes in a warehouse where they were supposed to be stored until the shredder got fixed and sold them on the street. Unauthorized distributors included a local McDonald's and a motel.

Now, seven Iron Mountain employees, their boss, and two local business owners have been named in what SFT claims was a case "wherein valuable SFT property, slated for destruction, was instead left available to IM's employees for plunder."

SFT is suing for attorney's fees and damages. In addition, it accuses Iron Mountain of negligence in several respects, including failing to keep its shredding equipment maintained, failing to hire honest employees, failure to keep the boxes of unused coupons secure (apparently, all employees at the shredding facility could get to them easily), failure to have an alternative method of destroying unwanted data, and failure to audit its shredding activities.

An Iron Mountain prepared statement, forwarded to Byte and Switch by a spokeswoman, denies the validity of SFT's accusations: "We have fulfilled all our contractual obligations to the State Fair of Texas. We believe this lawsuit is totally without merit and a thinly veiled attempt either to pressure Iron Mountain into offsetting State Fair losses that have nothing to do with our contract or to publicize a warning to people that they should not use illicitly acquired tickets." Neither Iron Mountain nor Dallas police found any evidence of wrongdoing in their investigations, the company claims.

There are several lessons in all this. First, the case is a cautionary tale for any company that relies on outside services for document destruction. It's also a reminder that mistakes can be made in the destruction of data as they can in any other aspect of its management. This was also highlighted when Chase Card Services mistakenly trashed some valuable tapes earlier this month. (See Chase Trashes Tapes.)It's also yet another strike against Iron Mountain, which has suffered a series of ill-fated data management events, including fires at facilities in Canada and the U.K. and the loss of customer data on tapes stored for Time Warner last year. (See Iron Mountain Feels the Heat and Archiving Goes to Blazes.) In May, Senator Charles E. Schumer, D-N.Y. asked the U.S. Federal Trade Commission to investigate Iron Mountain after security breaches involving the Long Island Railroad and a bank in Los Angeles.

SFT is doing its own shredding and is looking into hiring an outside firm to help it shred documents on SFT's site. So far, SFT hasn't named any specific firms it intends to contract, though Iron Mountain competitors include Anacomp and Lason, among others.

Mary Jander, Site Editor, Byte and Switch