Court Imposes Spoliation Sanctions Against Cybersecurity Provider That Failed to Preserve Evidence of Its Alleged Monitoring Failures

Posted: April 29, 2026 / Written by: Ian Weiss, Channing J. Turner, Thomas A. Kissane, Samuel L. Butt / Category Discovery/Disclosure

Court Imposes Spoliation Sanctions Against Cybersecurity Provider That Failed to Preserve Evidence of Its Alleged Monitoring Failures

On April 2, 2026, Justice Joel M. Cohen issued a Decision and Order in Greater New York Mutual Insurance Co. v. SKOUT Monitoring, LLC, Index No. 650539/2022, granting plaintiff’s motion for spoliation sanctions. GNY sued its security operations center provider, SKOUT, alleging SKOUT failed to detect and escalate suspicious activity preceding a ransomware attack on GNY’s systems. After an evidentiary hearing, the court found SKOUT’s failure to preserve Slack communications, Zendesk ticket data, and historical alarm data constituted gross negligence, and imposed an adverse inference and an award of attorneys’ fees. The court declined to strike SKOUT’s answer. A central issue was when SKOUT’s duty to preserve arose. SKOUT argued it was when GNY sent a formal preservation demand, but the court found the duty arose six months earlier, explaining:

SKOUT’s duty to preserve evidence arose on June 2, 2021, after its internal investigation revealed troubling information that had been “mis-mapped” and sent to the wrong client and certainly by June 10, 2021 when it concluded (as discussed during an internal training session) that it had failed to provide certain “big red flag” alerts to GNY preceding the attack. Because SKOUT served as GNY’s security operations center provider, it understood — or should have understood — that its monitoring and escalation practices would likely be scrutinized in the aftermath of a ransomware attack that disabled GNY’s system and required emergency response measures. It had also specifically stressed to GNY the importance of preserving evidence in the aftermath of a cyberattack.

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