S.D.N.Y. on Sanctions for the Loss of ESI


On April 2, 2018, Magistrate Judge Robert Lehrburger issued a decision in World Trade Ctrs. Ass'n v. Port Auth. of N.Y. & N.J., 15 Civ. 7411 (LTS)(RWL), 2018 U.S. Dist. LEXIS 56894 (S.D.N.Y.) recommending that the defendant's motion for sanctions be denied. The Port Authority moved for sanctions for the spoliation of ESI and paper documents pursuant to FRCP 37 and on the basis of the court's inherent authority.

The WTC explained the loss of documentation as being the result of a consultant's decision to discard paper records; a change in email service providers; the washing of 25 computer drives; and the loss of data on a shared driver during the migration of data to a new server. The court cited the standard for a motion for sanctions stated in Chin v. Port Authority of New York & New Jersey, 685 F.3d 135, 162 (2d Cir. 2012):

1. The party must have an obligation to preserve data at the time it's destroyed.

2. The party must have a culpable state of mind.

3. A reasonable trier of fact would find that the destroyed evidence was relevant to a claim or defense.

The decision states that the failure of the WTCA to issue a litigation hold until September 2013 (the relevant time period being 2011 - 2014) did not mean that appropriate preservation measures were not implemented, or that sanctions should be imposed.

The court did not find that the consultant acted in bad faith or or discarded any relevant documents. Although she took her action prior to the litigation hold, she did receive instructions related to the trademark material at issue in the case. Although, the instructions to the consultant were oral, not written, Judge Lehrburger found that the WTCA acted negligently, but not in bad faith and was not gross negligent. He also found that the Port Authority's contention that the documents could have been warehoused at a fraction of the cost of the consultant's review was irrelevant.

Declarations submitted by the defendant in support of its contention that relevant documents were destroyed were found to be "conclusory and overly general". [Id. *28]. The declaration did not state the records had information relevant to the case.

Fed. R. Civ. P. 37(e)(2) requires that for sanctions to be imposed a finding must be made that "the party acted with the intent to deprive another party of the information's use in the litigation." The court noted that the Port Authority did not show any reason why a log or documentation would be required for the migration of data between systems, and so the absence of such a record did not indicate that relevant evidence was lost. The vendor that performed the migration also stated that its customers receive a backup of their email.

The mere existence of 'washed' hard drives, absent additional evidence, did not provide evidence of bad faith. "The fact that an entity like WTCA possessed blank or 'wiped' hard drives is not by itself indicative of any foul play." [Id. at 34].

The court also rejected the Port Authority' s contention that the WTCA failed to receive complete email archives from its vendor. "Again, the Port Authority distorts the record. WTCA counsel's letter makes clear that the deficient production was due to an error in the collection process, not because emails were missing or had been destroyed.(Ewing Letter at 1.) MindSHIFT rectified the error and produced all responsive documents on its servers." [Id. at 35].