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Electronic Discovery in New York State Litigation — Spoliation.

Photograph:  Close up photograph of computer screen with lines of colorful code.

I have a special interest in electronic discovery in New York State litigation actions.  As part of my on-going discussion of important litigation issues in the New York State courts, let’s examine a fairly-recent case from the New York State Court of Appeals addressing the spoliation standards for electronic discovery in New York:  Pegasus Aviation I, Inc. v. Varig Logistica S.A., 26 N.Y.3d 543 (2015).

As is usually the case, the Appellate Division, First Department, addressed spoliation of electronic discovery first, before Pegasus, in VOOM HD Holdings LLC v. EchoStar Satellite L.L.C., 93 A.D.3d 33 (1st Dept. 2012).  In VOOM, the Appellate Division adopted the preservation and litigation-hold rulings of Judge Shira Scheindlin from the five (5), count ‘em, now-famous Zubulake v UBS Warburg LLC, cases, specifically the case known colloquially as Zubulake IV, at 220 F.R.D. 212 (S.D.N.Y. 2003), and applying them to New York State actions.

Pegasus is the key N.Y. Court of Appeals decision that affirms the general principles of the VOOM decision regarding preservation of electronic data and spoliation sanctions applicable thereto in New York State practice. 

In Pegasus, the Court of Appeals reversed a First Department decision that held missing electronically-stored data was only negligently lost, was not relevant, and therefore not subject to spoliation sanctions.  Utilizing the VOOM decision in a lengthy analysis, the Court of Appeals addressed whether a party possessing (and losing) electronically-stored information was grossly or simply negligent, based upon the facts of the case, and, critically, whether that negligently-lost evidence was relevant.  Judge Pigott set forth a clear ruling in this regard, stating the following:

A party that seeks sanctions for spoliation of evidence must show that the party having control over the evidence possessed an obligation to preserve it at the time of its destruction, that the evidence was destroyed with a "culpable state of mind," and "that the destroyed evidence was relevant to the party's claim or defense such that the trier of fact could find that the evidence would support that claim or defense" (VOOM HD Holdings LLC v EchoStar Satellite L.L.C., 93 A.D.33, 45 [1st Dept 2012], quoting Zubulake v UBS Warburg LLC, 220 FRD 212, 220 [SD NY 2003]). Where the evidence is determined to have been intentionally or willfully destroyed, the relevancy of the destroyed documents is presumed (see Zubulake, 220 FRD at 220). On the other hand, if the evidence is determined to have been negligently destroyed, the party seeking spoliation sanctions must establish that the destroyed documents were relevant to the party's claim or defense (see id.). 

On this appeal, we are asked to decide whether the Appellate Division erred in reversing an order of Supreme Court that imposed a spoliation sanction on the defendants. We hold that it did, and remand the matter to the trial court for a determination as to whether the evidence, which the Appellate Division found to be negligently destroyed, was relevant to the claims asserted against defendants and for the imposition of an appropriate sanction, should the trial court deem, in its discretion, that a sanction is warranted.

As such, it appears that New York State has not adopted the December 2015 Federal Rules of Civil Procedure Rule 37(e) change, which significantly eases and/or eliminates spoliation sanctions on negligently lost electronic data in Federal actions.  We will have to await the outcome of additional litigation to see the extent to which the New York Court of Appeals continues to differ from the Federal Rules in this regard.  

James Snyder