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No Adverse Inference for Damage to Only Copy of Disk Absent Evidence of Materiality; Monetary Sanctions Imposed

Posted in CASE SUMMARIES

Cognex Corp. v. Microscan Sys., Inc., —F. Supp. 2d.—, 2013 WL 6906221 (S.D.N.Y. Dec. 31, 2013)

In this case, Defendants sought sanctions for the spoliation of an optical disk which was damaged in shipping between Plaintiffs and their expert and which was therefore “unreadable.”  Finding that an adverse inference was unwarranted absent a showing that the disk contained information that would be “material to [Defendants’] claims or defenses,” the court imposed monetary sanctions, including ordering payment of Defendants’ costs and attorneys’ fees associated with the spoliation motion and a $25,000 fine payable to the Clerk of the Court.

On multiple occasions, Defendants requested that Plaintiffs provide them with an optical disk (“CD”) containing particular relevant software and Plaintiffs promised that they would. “[W]ell after” Defendants’ specific requests for production, however, the original CD was shipped to Plaintiffs’ technical expert and was allegedly damaged by the shipping company during its return.  There was no copy.  Defendants sought spoliation sanctions in the form of an adverse inference.

 The court had little trouble finding that Plaintiffs had a duty to preserve.  Turning to the question of culpability, the court concluded that “[i]n these circumstances, Cognex’s failure to make a copy of the CD before shipping it to their expert [wa]s sufficient to infer a culpable state of mind.”  The court declined to impose an adverse inference, however, absent evidence of the materiality of the contents of the disk:

In some instances, this culpable conduct would suffice to warrant an inference that the destroyed evidence was relevant to the party’s claim or defense. See Residential Funding, 306 F.3d at 107, 109. However, relevance is one thing, and materiality is another. Here, defendants have failed to show how a CD that contained software related to the HawkEye 51 reader would be material to their claims or defenses. This lack of materiality does not excuse plaintiffs’ misconduct, but it is highly pertinent to determining what sanction is appropriate. In particular, the absence of materiality suggests that the severe punishment of an adverse inference instruction would here be excessive.

Nonetheless, the court did find that monetary sanctions were warranted and awarded Defendants their costs and attorneys’ fees associated with the motion for sanctions.  The court also ordered Plaintiffs to pay a $25,000 fine to the Clerk of the Court.

A copy of the court’s order is available here.