eDiscovery Update: More Than Missing Emails Needed for Spoliation Sanctions

This article was originally posted on The Daily Record.

Two recent New York State court cases demonstrate that it takes more than missing emails for courts to levy sanctions for spoliation.

‘Curtin v. Blair Bros. Contracting’

The first case, decided Aug. 28, in the Supreme Court of New York, Clinton County, involved a married couple (plaintiffs) who simply wanted to have a house built, and their contractor (defendants), who allegedly engaged in fraudulent behavior.

Plaintiffs Dennis D. Curtin and Karen Hogan-Curtin filed suit against defendants Blair Brothers Contracting Inc. “…[s]pecifically, according to plaintiffs, they were improperly charged for tools that defendants kept for their own personal use, as well as for fuel and automobile insurance for defendants’ trucks and for property, liability and compensation insurance. Plaintiffs further contend that defendants routinely over-ordered construction materials and then took all surplus materials from the job site for their own personal use.”

Defendants counterclaimed for $35,000, an amount which allegedly remained still owed under the contract. To support the counterclaim, defendants requested emails between plaintiffs and their architect. Defendants asserted that Hogan-Curtis’s deposition stated that she communicated with the architect via email and occasionally by phone. Defendants wanted these emails to support their claim that the “extras” that were charged were legitimate and requested by the plaintiffs.

“While defendants expected to receive numerous emails in response to their request, they instead received — as they characterize it — only a handful of email[s].”

Defendants claimed that plaintiffs destroyed or failed to preserve the relevant emails and, as a result, are liable for spoliation. Defendants requested “that the jury be given an adverse inference charge and, further, that plaintiffs be precluded from offering any evidence in opposition to the counterclaim.”

In response to the spoliation charge, plaintiffs submitted affidavits that while they did indeed have email communications with the architect, those communications did not relate to any “extra” work.

“Curtin-Hogan states that, while she did communicate with Camens (the architect) via email, she does not recall emailing with respect to questions as to whether any work that was being done by [d]efendants was either part of the contract or beyond the scope of the contract, or any extras that were being claimed.”

Plaintiffs also admitted that their computer became infected with a virus in the summer of 2010. That computer, which was used to send emails to the architect, was discarded without making any effort to save the contents. “Again, however, plaintiffs contend that there were no emails on the computer pertaining to ‘extras’ done on the project. According to plaintiffs, defendants have been given all of the emails — both to and from Camens — that are in their possession.”

The court declined to impose sanction for the alleged spoliation of evidence. The court opined, “…[w]hile plaintiffs were perhaps negligent in discarding their computer in 2010 without making any effort to save its contents, the fact remains that defendants have failed to prove that the subject emails ever actually existed.”

Here we have a court deciding that, absent proof that communications asserted actually exist(ed), no sanctions are warranted.

‘L&L Painting Co., Inc. v. Odyssey Contr. Corp.’

The second case, decided Sept. 25, in the Supreme Court of New York, New York County, was also a “dispute between plaintiff L & L Painting Co, Inc. (L&L) and defendant Odyssey Contracting Corp. (Odyssey) over payment for Odyssey’s work on the Queensboro Bridge Repainting Project.”

Similar to the first case, missing emails were an issue in this matter. Odyssey moved “for sanctions against L&L for spoliation of evidence, based on L&L’s failure to preserve emails, from late March and early April 2008, from the personal email accounts of certain management employees.”

Odyssey argued that L&L’s duty to preserve arose at the latest on April 9, 2008, when it commenced the lawsuit, and a litigation hold should have been implemented on or before that date.

The court stated that “[i]n this case, there is no dispute that L&L had an obligation, at least upon the filing of this lawsuit, to preserve evidence, including management employees’ email correspondence related to Odyssey’s work on the Project.” The court agreed that this obligation arose no later than April 9, 2008. L&L also admitted that there was no litigation hold in place on April 9, 2008, and it could not articulate any steps it took to “preserve potentially relevant electronically stored documents.”

Despite these facts, the court declined to impose sanctions for any “lost” emails or other data. Once again it was all about relevance and the requesting party’s failure to show that any missing information would have supported the claims and defenses pertinent to the case.

“Here, while the court finds that L&L was negligent in failing to institute a litigation hold or otherwise act in a timely manner to preserve the emails in question, the facts do not support a finding of bad faith or gross negligence against L&L. Nor has Odyssey made an adequate showing of the relevance of the missing emails to its remaining counterclaims or how they would support its defenses; its reliance on the presumption of relevance is insufficient to establish a right to sanctions.”

Another interesting note in this matter is that litigants in New York continue unsuccessfully to rely on and cite the Pension Committee opinion when seeking sanctions for failure to preserve evidence.

“Contrary to Odyssey’s apparent argument, relying on Pension Comm, of Univ. of Montreal Pension Plan v Banc of Am, Sec., LLC, 685 F. Supp. 2d 456 (S.D.N.Y. 2010), the failure to implement a litigation hold does not, by itself, demonstrate gross negligence. As the First Department recently made clear, the ‘per se rule apparently articulated in Pension Comm.’ has been disapproved by the Second Circuit in Chin v. Port Auth. of N.Y. & N.J.

Four takeaways

  1. Courts in New York are judiciously deciding whether or not to impose sanctions for lost ESI on a case by case basis.
  2. Parties should not rely on the Pension Committee if a formal litigation hold was not issued.
  3. Best practice is to issue a formal hold and document the steps taken to identify and preserve potentially relevant information.
  4. If you or your client inadvertently fails to preserve evidence it is not the end of the world (or the case). The burden lies with the requesting party to prove its assertions and show that the missing, lost or destroyed information would have yielded unique and relevant information supporting the claims and defense of the matter.

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