i mean, destroying evidence related to the case is a little more than a "procedural violation". that's clear cut obstruction and it's a felony crime.

I mean, they settled as soon as they found this, as they knew how it would've played out in a trial. If you can show a judge that evidence was deleted, the judge/jury would need to assume that the missing evidence would show the guilt of that party.

The needle in the haystack part was that Vivendi were trying to bury Valve in evidence, as they assumed that they wouldn't be able to afford to hire a bunch of Korean paralegals to go through everything. A wealthy opponent will do that in order to put you in the position where you have to choose between settling or paying a fortune to go through the evidence that may or may not contain anything useful.

If I'm reading this correctly, the haystack is the malicious compliance of providing all documents printed and in Korean. The needle is the document that snuck between other documents so that Valve attorneys wouldn't find it.

Sort of procedural, yes - if you are alleging something and the evidence that would support that was destroyed by the other party, the court can make an adverse inference which basically means the court assumes the destroyed evidence would have proved your point.

(I am not a lawyer)

To me this is what allowed them to not comb through the millions of documents. Since you have a piece of evidence they gave you admitting to destroying additional evidence, they basically can get not goodwill at all in front of a judge, so it doesn't matter if they say "your honor everything was turned over during discovery and we're all clear", the instant your lawyers contact their lawyers, it's settling time.