MEMORANDUM AND ORDER
This case concerns a painting that the defendants allegedly agreed to purchase from the plaintiff for $4.2 million (the ‘Work”). The plaintiff, Richard Green (Fine Paintings) (“Richard Green”), now moves pursuant to Rule 37 of the Federal Rules of Civil Procedure for sanctions against defendant Mary Alice McClendon and her counsel in connection with the failure to preserve and produce certain electronically-stored documents. For the reasons that follow, the plaintiffs motion is granted in part and dеnied in part.
Background
A. Factual Background
In May 2007, the plaintiff, a London-based art gallery and dealer, displayed artwork for sale at the annual International Fine Art Fair at the Park Avenue Armory in Manhattan. (Second Amended Complaint (“SAC”), ¶¶ 8, 10). The defendants attended the fair and, while there, negotiated a purchase price of $4.2 million for the Work. (SAC, ¶¶ 10-12; Deposition of Mary Alice McClendon dated April 2, 2009 (“McClendon Dep.”) at 5-11, 151-52). The parties agreed that the defendants would make an initial payment of $500,000, and would satisfy the remaining balance by Mаy 12, 2008. (SAC, ¶¶ 12, 17; McClendon Dep. at 9-11, 151-52). The Work remained in the possession of the Richard Green gallery pending full payment. (McClendon Dep. at 9-11).
On July 18, 2007, Mr. and Mrs. McClendon paid $500,000 to the plaintiff. (SAC, ¶ 15 & Exh. B). At some point thereafter, the McClendons began to experience marital problems, ultimately separating in anticipation of divorce.
The defendants never paid the remaining $3.7 million. Accordingly, they also never took possession of the Work. The defendants deny that they entered into a binding contract to purchase the Work, pointing out that the parties never executed a written agreement. (Defendant Mary Alice McClendon’s Motion to Dismiss Plaintiffs Second Amended Complaint and Memorandum of Law in Supрort Thereof at 6-17). In addition, they contend that the $500,000 payment was actually a refundable deposit. (Declaration of John R. Cahill dated March 13, 2009 (“Cahill 3/13/09 Decl.”), ¶ 3).
B. Procedural Background
The plaintiff filed suit on October 3, 2008, asserting claims for breach of contract and promissory estoppel. The parties exchanged initial disclosures in early December, and the plaintiff served its first document request on Mrs. McClendon on December 23, 2008. (Declaration of John R. Cahill dated July 7, 2009 (“Cahill 7/7/09 Deck”), ¶¶ 4-5 & Exhs. A, C). Among other items, the plaintiff requested all documents “concerning the
In February and March of 2009, counsel for the plaintiff and counsel for Mrs. McClen-don exchanged several letters and e-mails concerning the plaintiffs discovery requests. (Letter of Ronald W. Adelman dated Feb. 26, 2009, attached as Exh. F to Cahill 7/7/09 Decl.; E-mail of Carter Andersen dated March 12, 2009, attached as Exh. G to Cahill 7/7/09 Decl.; E-mail of Carter Andersen dated March 13, 2009, attached as Exh. H to Cahill 7/7/09 Decl.). Mrs. McClendon and her counsel repeatedly represented that they had conducted thorough searches for responsive documents and had produced everything in Mrs. McClendon’s possession. On March 16, 2009, the plaintiff filed a motion to compel the production of certain documents, including documents concerning other art transactions and any non-privileged communications with third parties concerning the Work. (Ca-hill 3/13/09, ¶¶ 7-14). On April 2, 2009, I ordered the defendants to produce all documents relating to the Work as well as certain information concerning other artworks. (Order dated April 2, 2009, ¶¶ 1, 4). The defendants were also ordered to certify the completeness of their responses. (Order dated April 2, 2009, ¶ 6).
On April 24, 2009, Mrs. McClendon produced a two-page, undated Excel spreadsheet titled “Fine Art, Miscellaneous Galleries” from her home computer files. (Cahill 7/7/09 Decl., ¶ 10 & Exh. L). The spreadsheet provides information about thirty-seven artworks,
Thereafter, on June 9, 2009, Mrs. McClen-don’s counsel provided what appear to be three additional electronic versions of the spreadsheet with partial electronic history for each.
The plaintiff subsequеntly filed the instant motion, seeking an order authorizing a forensic examination of Mrs. McClendon’s computer and appropriate sanctions. When Mrs. McClendon responded, however, she disclosed a fact that was previously unknown to the plaintiff and to the Court: in January 2009, “the son of a friend” who is “familiar with computers” reinstalled the operating system on Mrs. McClendon’s computer. (Declaration of Mary Alice McClendon dated July 17, 2009 (“McClendon Decl.”), ¶¶2-3; Declaration of Jordan Chapman dated July
In light of this new informatiоn, the plaintiff now withdraws its request for a forensic examination of Mrs. McClendon’s computer, contending that such a search would be a “useless exercise.”
A. Legal Standard
Spoliаtion is “the destruction or significant alteration of evidence, or the failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation.” Byrnie v. Town of Cromwell, Board of Education,
“The determination of an appropriate sanction for spoliation, if any, is confined to the sound discretion of the trial judge, and is assessed on a case-by-case basis.” Zubulake v. UBS Warburg LLC,
B. Plaintiffs Motion
1. Adverse Inference
It is well established that a party seeking an adverse inference instruction based on the spoliation of evidence must establish:
(1) that the party having control over the evidence had an obligation to preserve it at the time it was destroyed; (2) that the records were destroyed “with a culpable state of mind”; and (3) that the destroyed evidence was “relevant” to the party’s claim or defense such that a reasonable trier of fact could find that it would support that claim or defense.
Residential Funding,
a. The Obligation to Preserve Evidence
In general, “[t]he obligation to preserve evidence arises when [a] party has notice that the evidence is relevant to litigation or when a party should have known that the evidence may be relevant to future litigation.” Zubulake v. UBS Warburg LLC,
When the duty to preserve attaches, a litigant “must suspend [her] routine document retention/destruetion policy and put in place a ‘litigation hold’ to ensure the preservation of relevant documents.” Zubulake V,
Here, there is no question that Mrs. McClendon had an obligation to preserve all documents stored on her computer’s hard drive concerning the Work or the plaintiff, including the spreadsheet. This duty arose no later than October 3, 2008, when this lawsuit was filed; at that point, the defendant should have known that such information would be relevant or could lead to the discovery of admissible evidence. See Arista Records,
b. Culpability
“The preservation obligation runs first to counsel, who has ‘a duty to advise his client of the type of information potentially relevant to the lawsuit and of the necessity of preventing its destruction.’” In re NTL, Inc. Securities Litigation,
for the current ‘good faith’ discovery system to function in the electronic age, attorneys and clients must work together to ensure that both understand how and where electronic documents, records аnd emails are maintained and to determine how best to locate, review, and produce responsive documents. Attorneys must take responsibility for ensuring that their clients conduct a comprehensive and appropriate document search.
Id.; see also Phoenix Four, Inc. v. Strategic Resources Corp., No. 05 Civ. 4837,
There is no question that Mrs. McClen-don’s counsel failed to meet these discovery obligations. Unless Mrs. McClendon brazenly ignored her attorney’s instructions, counsel apparently neglected to explain to her what types of information would be relevant and failed to institute a litigation hold to protect relevant information from destruction. Moreover, despite numerous representations to the contrary, it is highly unlikely that counsel actually conducted a thorough search for relevant documents in Mrs. McClendon’s possession in connection with their initial disclosure duties or in response to the plaintiffs first document request. If that had been done, counsel certainly would have found the spreadsheet from Mrs. McClendon’s personal computer files. As one court has aptly stated,
The client is charged with knowledge of what documents it possesses____[The defendant’s counsel cannot] simply react to plaintiffs fortuitous discovеry of the existence of relevant documents by making disjointed searches, each time coming up with a few more documents, and each time representing that was all they had. Under the federal rules, the burden does not fall on plaintiff to learn whether, how and where defendant keeps relevant documents.
Tarlton v. Cumberland County Correctional Facility,
In addition, there is no justifying the delay in providing relevant documents to the plaintiff once counsel received the CDs containing Mrs. McClendon’s computer files in April 2009. (McClendon Deck, ¶ 4). In violatiоn of the obligation to supplement discovery pursuant to Rule 26(e), counsel waited until the plaintiff specifically demanded additional information about the spreadsheet and other electronically-stored documents before searching the files that were, by then, in counsel’s possession. (Cahill 7/7/09 Deck, ¶¶ 14-20 & Exhs. M, N, P, S, T; Drab Deck, ¶¶ 3-4).
In this circuit, a “culpable state of mind” for purposes of a spoliation inference includes ordinary negligence. Residential Funding,
e. Relevance
When evidence is destroyed in bad faith, that fact alone is sufficient to support an inference that the missing evidence would have been favorable to the party seeking sanctions, and therefore relevant. Residential Funding,
“[R]elevant” in this context means something more than sufficiently probative to satisfy Rule 401 of the Federal Rules of Evidence. Rather, the party seeking an adverse inference must adduce sufficient evidence from which a reasonable trier of fact could infer that the destroyed or unavailable evidence would have been of the nature alleged by the party affected by its destruction.
Residential Funding,
Here, as a result of the defendant’s negligence, the electronic record of the spreadsheet originally produced to the plaintiff in hard-copy form has been eliminated. And, in the process of reinstalling her computer’s operating system, Mrs. McClendon may have lost other responsive documents. There is no evidence, however, that any destroyed documents would have been unfavorable to Mrs. McClendon. In fact, it is uncertain whether the plaintiff has actually been deprived of any information, since all of the files previously contained on Mrs. McClendon’s hard drive were purportedly transferred to the CDs that are now in counsel’s possession.
Under these circumstances, without some proof that the defendant’s actions created an unfair evidentiary imbalance, an adverse inference is not appropriate. The plaintiff, is not, however, foreclosed from renewing its request if warranted by the subsequent discovery of additional evidence. Indeed, if it becomes apparent that relevant information was in fact destroyed, or that the defendant acted in bad faith, an adverse inference may be warranted.
2. Other Sanctions
Although an adverse inference is not justified at this time, other measures to remedy the defendant’s deficient preservation efforts are appropriate. See, e.g., West,
In this case, the other sanctions requested by the plaintiff are wholly appropriate. Authorizing further discovery concerning the spreadsheet and other electronically-stored documents will allow the plaintiff the chance to determine whethеr it is in fact missing relevant evidence. See Treppel,
The plaintiff is also entitled to an award of costs, including attorneys’ fees. Monetary sanctions are appropriate “to punish the offending party for its actions [and] to deter the litigant’s conduct, sending the message that egregious conduct will not be tolerated.” In re WRT Energy Securities Litigation,
Questions remain, however, concerning the amount of the award and the manner in which liability should be allocated between Mrs. McClendon and her counsel. The first issue is easily resolved: following completion of the additional discovery authorized by this order, plaintiffs counsel shall submit a fee application to me for determination. The second issue is more complicated. The present record gives little insight into the precise circumstances under which electronic information was destroyed; similarly, there is no explanation of how or why other discovery breaches occurred. As the respective blameworthiness of Mrs. McClendon and her counsel cannot presently be ascertained, it is uncertain how payment of the plaintiffs award should be allocated between them. See, e.g., Phoenix Four,
Conclusion
In sum, the plaintiffs motion is granted in part and denied in part. The request for an adverse inference is denied without prejudice to rеnewal if warranted by the discovery of additional evidence. Mrs. McClendon shall be made available for further deposition, and she shall identify any person who created or modified the spreadsheet, from whom discovery may also be taken. Following completion of this discovery, the plaintiff may submit a fee application, and the allocation of liability for fees as between Mrs. McClendon and her attorney will be decided.
SO ORDERED.
Notes
. Their divorce was finalized in January 2009. (McClendon Dep. at 141).
. The parties had consistent contact throughout the remainder of 2007 and in early 2008 concerning the Work and other paintings. The details of their communications, although relevant to the underlying suit, are not important for purposes of determining the instant motion and are thus not described in this opinion.
. The spreadsheet reflects the name and artist of most artworks listed, and includes columns noting each item's retail price, purchase price, invoice number, value, and whether it came with a bill of sale or a guarantee. (Fine Art, Miscellaneous Galleries Spreadsheet ("Spreadsheet”), attached as Exh. L to Cahill 7/7/09 Decl.).
. The electronic history was obtained by counsels' inspection of the documents rather than by an expert’s inspection of Mrs. McClendon’s computer's hard drive. (E-mail of Michelle Drab dated June 10, 2009, attached as Exh. U to Cahill 7/7/09 Decl.).
. Indeed, Mrs. McClendon hired a professional to search her computer hard drive for relevant documents in April 2009. (McClendon Deck, ¶ 5). Predictаbly, this search yielded no relevant results. (Decker Deck, ¶¶ 4-6). Moreover, there was no trace of the spreadsheet. (Decker Deck, ¶6).
. While it is true that under certain circumstances "a showing of gross negligence in the destruction or untimely production of evidence” will support the same inference, Residential Funding,