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Current Developments in the Commercial Divisions of the
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Posted: June 20, 2015

Spoliation Sanctions Not Justified Where the Destroyed Documents Were Not Relevant to the Action

On June 11, 2015, the First Department issued a decision in AJ Holdings Group, LLC v. IP Holdings, LLC, 2015 NY Slip Op. 04943, holding that spoliation sanctions were not justified when the destroyed evidence was not relevant to the action.

In AJ Holdings Group, the plaintiff did not “ensure that its principals, who were all involved in the instant transactions, preserved their emails on various accounts used by them, and its failure to implement any uniform or centralized plan to preserve data or even the various devices used by the “key players” in the transaction. The court agreed with the trial court that this “demonstrated gross negligence with regard to the deletion of the emails. This gross negligence gave rise to a rebuttable presumption that the spoliated documents were relevant.” The First Department reversed the trial court’s award of sanctions, however, because:

plaintiff sufficiently rebutted that presumption by demonstrating that the defenses available to defendants all necessarily turned on communications to or with them, not plaintiff’s internal communications.

In particular, defendants claim that there was an oral modification to the parties’ contract, whereby plaintiff waived the termination provisions. This is despite the fact that the agreement contained a clause barring oral modifications. In such a circumstance, defendants must establish an executed oral modification, or partial performance or estoppel unequivocally referable to the alleged oral modification. Because defendants can have only relied on communications they received from plaintiff to establish this defense, there is no sense in which the deleted internal emails of plaintiff would be relevant. As such, it was error to impose spoliation sanctions.

(Internal quotations and citations omitted). Given all the time and effort we put into discovery, it is maddening when an opponent destroys evidence and nothing is done about it. Yet the rule used in this decision is necessary to prevent collateral litigation over discovery from taking up even more of our time and effort. If the evidence that was destroyed did not matter, we need to grimace and move on.

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