945 F. Supp. 2d 494
S.D.N.Y.2013Background
- Sekisui sues Hart and Trudel-Hart for breach of contract over ADI acquisition; missing/destroyed ADI ESI is at issue.
- Hart’s and Ayres’ email files were permanently deleted after duty to preserve arose; preservation holds were belated and not properly communicated to IT.
- Hart’s ESI deletion occurred March 2011, with hold issued January 2012 and no backups; NCS acted under Taylor’s directive.
- Ayres’ ESI was deleted October 2011 under Taylor’s direction with Morrissey’s apparent approval; large portions of Ayres’ emails lost.
- Magistrate Judge Maas declined sanctions; district judge reverses, awarding an adverse-inference sanction against Sekisui.
- Court holds Sekisui acted with gross negligence and willful spoliation, creating presumptive prejudice; sanctions include adverse-inference instruction and fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Hart’s ESI destruction supports an adverse-inference instruction | Hart argues destruction was willful and prejudicial | Sekisui contends no prejudice shown | Yes; willful destruction warrants adverse inference. |
| Whether Ayres’ ESI destruction supports an adverse-inference instruction | Ayres’ destruction is relevant and prejudicial | Prejudice not shown by Hart alone; Ayres not analyzed | Yes; destruction constitutes willfulness and supports inference. |
| Whether Sekisui’s preservation failures constitute gross negligence justifying sanctions | Sekisui failed to implement a timely litigation hold | Holds were later issued and practice acceptable | Yes; preservation failures amount to gross negligence. |
| Whether prejudice is established when spoliation is willful or grossly negligent | Prejudice presumed due to loss of relevant ESI | Prejudice must be shown by evidence | Prejudice presumed; court may award sanctions. |
Key Cases Cited
- Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99 (2d Cir. 2002) (controlling standard for adverse inferences in spoliation)
- Mali v. Federal Ins. Co., 720 F.3d 387 (2d Cir. 2013) (case-by-case approach to failure to produce relevant evidence)
- Beaven v. United States Dep't of Justice, 622 F.3d 540 (6th Cir. 2010) (adverse inference where destruction severely prejudices)
- Pension Committee of Univ. of Montreal Pension Plan v. Banc of America Secs., LLC, 685 F. Supp. 2d 456 (S.D.N.Y. 2010) (relevance/prejudice may be presumed for bad faith or gross negligence)