93 A.D.3d 33
N.Y. App. Div.2012Background
- This case determines duties in electronic discovery and sanctions for failing to preserve ESI. The court adopts the Zubulake preservation standard.
- VOOM HD, a Delaware LLC owned by Eainbow, and EchoStar had a long-term affiliation agreement for EchoStar to distribute VOOM’s HD channels and to audit VOOM’s spending; a $100 million annual spend trigger existed.
- EchoStar began asserting breaches and began termination discussions in mid-2007, while VOOM implemented a litigation hold by July 31, 2007.
- EchoStar’s email auto-delete policy did not stop during anticipated litigation and was not halted until four months after suit was filed, resulting in loss of relevant emails.
- VOOM moved for spoliation sanctions; the motion court found EchoStar reasonably anticipated litigation by June 2007 and gross negligence in preserving evidence.
- The court affirmed sanctions: an adverse inference adverse-to-EchoStar was appropriate, given gross negligence and prejudice to VOOM.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Zubulake preservation standard applies | VOOM argues preservation duty triggered on reasonable anticipation of litigation | EchoStar contends standard is vague and not triggered absent pending litigation | Yes, Zubulake standard applies. |
| When did EchoStar reasonably anticipate litigation | Anticipation by June 20, 2007 | Anticipation may have arisen later | As of June 20, 2007, EchoStar should have anticipated litigation. |
| Whether failure to preserve supports spoliation sanctions | Destruction of evidence harmed VOOM's case | Destruction was inadvertent or not clearly linked to VOOM's claims | Yes, sanction warranted due to gross negligence in preservation. |
| What is the proper sanction for spoliation | Adverse inference would be appropriate | Less severe sanctions or none could suffice | Adverse inference appropriate and proportionate. |
| Whether trial-related expert preclusion was proper | Exclusion of certain expert evidence favored VOOM | Exclusion unnecessary or excessive | (Implicitly resolved with sanctions; remaining arguments unavailing) |
Key Cases Cited
- Zubulake v. UBS Warburg LLC, 220 F.R.D. 212 (S.D.N.Y. 2003) (preservation holds when litigation is reasonably anticipated)
- Pension Comm. of Univ. of Montreal Pension Plan v. Banc of America Sec., LLC, 685 F. Supp. 2d 456 (S.D.N.Y. 2010) (preservation hold; detailed standards for holds and penalties)
- Convolve, Inc. v. Compaq Computer Corp., 223 F.R.D. 162 (S.D.N.Y. 2004) (necessity of halting automatic deletion to preserve data)
- Broccoli v. EchoStar Communications Corp., 229 F.R.D. 506 (D. Md. 2005) (prior sanctions for similar spoliation; pattern of behavior relevant)
- Ahroner v. Israel Discount Bank of N.Y., 79 A.D.3d 481 (1st Dep’t 2010) (adverse inference supported by gross negligence in destruction of evidence)
- Sage Realty Corp. v. Proskauer Rose, 275 A.D.2d 11 (1st Dep’t 2000) (presumption of relevance when spoliation is gross negligence)