Commercial Division Blog

Current Developments in the Commercial Divisions of the
New York State Courts
Posted: August 29, 2017

Court Grants Adverse Inference Sanction for Failure Adequately to Preserve Evidence

On August 14, 2017, Justice Scarpulla of the New York County Commercial Division issued a decision in Brook v. Peconic Bay Medical Center, 2017 NY Slip Op. 31728(U), granting an adverse inference sanction for failure adequately to preserve evidence, explaining:

A party that seeks sanctions for spoliation of evidence must show that the party having control over the evidence possessed an obligation to preserve it at the time of its destruction, that the evidence was destroyed with a culpable state of mind, and that the destroyed evidence was relevant to the party’s claim or defense such that the trier of fact could find that the evidence would support that claim or defense. Where the evidence is determined to have been intentionally destroyed or as the result of gross negligence, the relevancy of the destroyed documents is presumed. Generally, the decision whether to impose sanctions, including to what extent, are matters within the discretion of the trial court.

Dr. Brook asserts that defendants should have reasonably anticipated litigation as early as October 2009, when the conduct underlying this litigation occurred, or at least in July 2010 or November 2010, when plaintiff’s former counsel demanded PMBC withdraw the AAR or otherwise be subject to litigation. Based on plaintiff’s letters in July and November 2010, I find that the defendants should have begun preserving and preventing the destruction of documents, including emails, at that time.

Defendants’ failure to institute a formal litigation hold as early as July, 2010, does not necessarily amount to gross negligence per se and is instead one factor that I consider in making a determination as to the alleged spoliator’s culpable state of mind. In evaluating this factor, counsel for defendants submits a letter, dated January 21, 2011, sent to PMBC, which issued a formal litigation hold, provided PMBC with detailed preservation instructions, and identified key players. This occurred approximately six months after defendants should have reasonably anticipated litigation, and one month after Dr. Brook instituted his initial lawsuit against defendants.

Other failures which support a finding of gross negligence, when the duty to preserve electric data has been triggered, include the failure to cease the deletion of email. Here, Dr. Brook presents circumstantial evidence demonstrating that defendants continued to delete emails because defendants were unable to produce missing documents from the original custodian’s account. Defendants point out that most of the missing emails were maintained in other forms, but that does not disprove that defendants deleted emails after the formal litigation hold.

Dr. Brook has shown that defendants did not sufficiently protect and preserve emails from July, 2010, the latest time defendants should have been on notice to do so, till January, 2011, when the first litigation hold was placed. However, defendants have shown that documents, other than emails, from that period were preserved and have been produced. Accordingly, I find that defendants did not act with purpose or with gross negligence. Instead, defendants were simply negligent in failing to preserve emails from July, 2010 till the formal litigation hold was placed by defendants’ counsel, and were negligent in failing to ensure that the litigation hold was thereafter stringently enforced.

With respect to whether the destroyed evidence was relevant to the party’s claim or defense such that the trier of fact could find that the evidence would support that claim or defense, Dr. Brook has submitted some evidence to show that emails supporting his claim were created between July, 2010 and January, 2011. For example, Dr. Brook submits an email non-party Dr. Richard Rubenstein sent to defendant Jay Zuckerman’s PMBC email account, dated August 7, 2011, which defendants are unable to produce. In the email, Dr. Richard Rubenstein objects to signing a statement about the investigation he found inaccurate and raises concern of possible criminal actions. The deleted communication supports Dr. Brook’s allegation of wrongdoing regarding PMBC’s investigation leading to the AAR.

However, Dr. Brook has identified many other emails as missing which do not support his claims and, in any event, Dr. Brook already has copies of these emails. Production of the same emails would merely be cumulative. Where, as here, independent evidence exists that allows the affected party to adequately prepare its case, a less severe sanction is appropriate. Also, many of the emails Dr. Brook submits as evidence of ESI destruction reference oral communications between the parties. Depositions of the individuals sending and receiving those emails may produce sufficient, alternative evidence of the subject matter of the discussions.

Based on the foregoing, and to impose a sanction co1mi1ensurate with the defendants’ conduct, I find that an adverse inference charge is appropriate solely for emails concerning Dr. Brook created by defendants between July, 2010 and January, 2011. This sanction is particularly appropriate because defendants were unable to produce the Rubenstein email or any other communication between PMBC administrators and physicians relating to the investigation into Dr. Brooks made during that time frame.

(Internal quotations and citations omitted).

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