2025 NY Slip Op 30052(U)
N.Y. Sup. Ct., New York Cty.2025Background
- Riptide Autonomous Solutions, LLC, sold its unmanned underwater vehicle business to BAE Systems via an Asset Purchase Agreement (APA) in April 2019, with potential earn-out payments up to $26 million based on post-acquisition revenue for 2019-2021.
- Riptide claims BAE breached the APA by not acting in good faith or using commercially reasonable efforts to maximize revenue, thereby reducing earn-out payments.
- BAE counterclaimed for fraudulent inducement and breach of contract, alleging Riptide misrepresented the capabilities of its products.
- The dispute centers on BAE's deletion of former Riptide employees' (the Smiths') email accounts, which Riptide asserts constituted spoliation of evidence necessary for its case.
- The deletion was done per BAE’s document retention policy before a formal litigation hold was implemented (March 2022), and before litigation commenced (May 2022).
- Riptide moved for spoliation sanctions, asking for adverse inferences and burden shifting, alleging BAE’s duty to preserve evidence was triggered earlier by various correspondences.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty to preserve evidence | BAE’s duty triggered by Nov. 2020 indemnification letter or Dec. 2020 internal email | Duty not triggered—no credible litigation threat; deletion per regular policy | No duty to preserve triggered |
| Culpable state of mind in deletion | No litigation hold and failure to preserve was gross negligence | Compliance with standard retention policy; no gross negligence | At most, simple negligence |
| Relevance of deleted emails | Deleted emails were key to breach claim evidence | No evidence proffered showing specific relevance of emails | No showing of relevance |
| Sanctions for spoliation | Entitled to adverse inferences and burden shift | Not justified—no duty breached, deletion per policy | Motion for sanctions denied |
Key Cases Cited
- Pegasus Aviation I, Inc. v. Varig Logistica S.A., 26 NY3d 543 (NY 2015) (establishing elements for spoliation sanctions: duty, culpable state of mind, and relevance).
- VOOM HD Holdings LLC v. Echostar Satellite L.L.C., 93 AD3d 33 (1st Dept 2012) (duty to preserve arises when litigation is reasonably anticipated).
- Delmur, Inc. v. School Constr. Auth., 174 AD3d 784 (2d Dept 2019) (party may be sanctioned for negligent or intentional loss/destruction of key evidence).