Do Not Delete
May 1, 2012 Posted By Barry Meade Trial Practice
Recently in Voom HD Holdings LLC v. EchoStar Satellite LLC, 93 A.D.3d 33, 939 N.Y.S.2d 321, 2012 WL 265833 (1st Dep’t 2012), the First Department affirmed a lower court’s holding that an “adverse inference” charge at trial is the appropriate sanction for a grossly negligent failure to preserve relevant electronically stored information (“ESI”). The First Department suggested that had the lower court found the level of defendant’s misconduct more egregious, it could have properly imposed the ultimate sanction of default.
In Voom, the court relied on the decisions in Zubulake v. UBS Warburg, 220 F.R.D. 212 (SDNY 2003) and Ahroner v. Israel Discount Bank of N.Y., 79 A.D.3d 481, 913 N.Y.S.2d 181 (1st Dep’t 2010). Zubulake held that “[o]nce a party reasonably anticipate litigation, it must suspend its routine document retention/destruction policy and put in place a ‘litigation hold’…”. Zubulake, at 218. In Voom, the court noted that there was a substantial factual record that the defendant, who was on notice that there was a strong probability of future litigation, failed to timely institute a litigation hold on ESI and failed to suspend its automatic document deletion policy. The defendants had actually been discussing the possibility of “potential litigation” in October 2007. See, Voom, 939 N.Y.S.2d at 326. Defendant did not institute a litigation hold until after litigation commenced in February 2008; and, it was not until nearly four months later that defendant suspended the automatic deletion of e-mails. Id. The record of the defendant’s conduct, in failing to timely institute a litigation hold and further destroying e-mails pursuant to its automatic purge policy, was so strong that the court found the conduct was grossly negligent.
The Zubulake standard, which the Voom court adopted, requires a litigation hold “[o]nce a party reasonably anticipate litigation…”. Zubulake at 218. Clearly, there is a certain vagueness to the standard, as there is no clear cut benchmark to determine when someone should “reasonable anticipate litigation”. Nevertheless, in light of Voom, great caution must be exercised by any party, when they first believe that litigation may ensue, to immediately institute a litigation hold and stop the automatic destruction of relevant documents, if they wish to avoid the harsh sanction of an adverse inference, or worse, default.