What happens to a legal malpractice case when documents suddenly go missing? Is there a responsibility to maintain documents from the underlying case based upon letters and discovery demands in the underlying case? How does a $ 20 million legal malpractice case get dismissed well before the merits are ever tested?
In 915 Broadway Assoc. LLC v Paul, Hastings, Janofsky & Walker, LLP ; 2012 NY Slip Op 50285(U) ; Decided on February 16, 2012 ; Supreme Court, New York County ; Fried, J. we see the results of "systematic" deleting of electronic data.
"Paul Hastings asserts that 915 Broadway, in particular, 915 Broadway representative Joel Poretsky, intentionally destroyed numerous pertinent documents after the duty to preserve such documents arose on April 1, 2008, the day the Litigation Hold was circulated. After being apprised by Paul Hastings that 915 Broadway had destroyed documents pertaining to this litigation, on March 31, 2011, I ordered 915 Broadway to hire forensic IT experts to analyze the extent of 915 Broadway’s document destruction problem. Those IT professionals confirmed that 915 Broadway had deleted relevant electronic documents well after a duty to preserve those documents arose. As more fully set forth below, the evidence adduced by 915 Broadway’s own IT professionals reveals the 915 Broadway’s destruction of relevant documents was extensive and systematic, and that, responsive documents continued to be destroyed by 915 Broadway, even after Paul Hastings raised its spoliation concerns before me.
Paul Hastings asserts that, any documents related to or touching upon the above claims, are crucial to its ability to present a complete defense in this action, and that 915 Broadway’s failure to safeguard its own documents related to these topics has permanently and irrevocably tainted the documentary record in this matter, and has made it impossible for Paul Hastings to adequately defend itself against 915 Broadway’s claims. Paul Hastings argues that the most severe sanction — the dismissal of 915 Broadway’s amended complaint — is thus appropriate and necessary to redress the prejudice that Paul Hastings has suffered as a result of the spoliation.
Under New York law , a party is required to preserve evidence that may be relevant to pending or reasonably foreseeable litigation. Thus, " [o]nce a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a litigation hold’ to ensure the preservation of relevant documents’" (Voom VD Holdings LLC v EchoStar Satellite L.L.C., ___ AD3d ___, 2010 NY Slip Op. 00658 [1st Dept 2012], quoting (Zubulake v UBS Warburg LLC, 220 FRD 212, 218 [SD NY 2003] ). Over the past decade, this duty to preserve has been extended to electronically stored information, including email and [*7]other electronic documents (see e.g. McCarthy v Phillips Elec. N.A., Index No. 112522/03, at 3 [Sup Ct, NY County June 9, 2005] ["duty to preserve relevant evidence … encompasses electronic data"]). Indeed, "[c]ourts have held that the contents of a computer are analogous to the contents of a filing cabinet" (Etzion v Etzion, 7 Misc 3d 940, 943 [Sup Ct, Nassau County 2005]). Thus, like the contents of a filing cabinet, which must be retained by a party to a pending or reasonably foreseeable litigation, electronic information saved on computers and email servers must also be diligently preserved.
Under the traditional law of spoliation of evidence, "[w]hen a party alters, loses or destroys key evidence before it can be examined by the other party’s expert, the court should dismiss the pleadings of the party responsible for the spoliation" (Squitieri v City of New York, 248 AD2d 201, 202 [1st Dept 1998]). Until recently, New York state courts have grappled with the difficult issue of how to apply the traditional law of spoliation — e.g., the prohibition against destroying easily identifiable physical evidence related to, for example, some kind of accident — to the destruction of email and other electronic documents, as "[e]lectronic discovery raises a series of issues that were never envisioned by the drafters of the CPLR," and "are not faced in traditional paper discovery" (Lipco Elec. Corp. v ASG Consulting Corp., 4 Misc 3d 1019(A), 2004 NY Slip Op 50967[U], * 6, * 8 [Sup Ct, Nassau County 2004]). However, in Ahroner v Israel Discount Bank of New York (79 AD3d 481 [1st Dept 2010]), the First Department has recently clarified the standard for imposing sanctions for the destruction of electronic evidence:
On a motion for spoliation sanctions involving the destruction of electronic evidence, the party seeking sanctions must establish that (1) the party with control over the evidence had an obligation to preserve it at the time it was destroyed; (2) the records were destroyed with a "culpable state of mind"; and (3) the destroyed evidence was "relevant" to the moving party’s claim or defense
Establishing that the electronic data was destroyed with a "culpable state of mind" does not require proof that the destruction was imminent or even reckless. " Spoliation sanctions … are not limited to cases where the evidence was destroyed willfully or in bad faith, since a party’s negligent loss of evidence can be just as fatal to the other party’s ability to present a defense’" (Standard Fire Ins. Co. v Fed. Pac. Elec. Co., 14 AD3d 213, 218 [1st Dept 2004] [citation omitted]). Thus, "[a] culpable state of mind’ … includes ordinary negligence" (Ahroner v Israel Discount Bank of New York , 79 AD3d at 482; see e.g. Mudge, Rose, Guthrie, Alexander & Ferdon v Penguin Air Conditioning Corp., 221 AD2d 243, 243 [1st Dept 1995] [dismissing plaintiff’s claims due to its "negligent loss of a key piece of evidence which defendants never had the opportunity to examine"])."