Court Finds Failure to Implement Litigation Hold Gross Negligence but Declines to Order Adverse Inference where Plaintiffs Failed to Establish Relevance of the Information Destroyed

ACORN v. County of Nassau, 2009 WL 605859 (E.D.N.Y. Mar. 9, 2009)

In this case, plaintiffs moved for an adverse inference instruction alleging that Nassau County failed to timely implement a litigation hold which resulted in the destruction of potentially relevant documents and that it failed to adequately search for potentially responsive electronically stored information (“ESI”).  Finding that plaintiffs did not sufficiently demonstrate that any lost materials would have been favorable to them, the court denied the motion.  However, upon the court’s finding that the County’s failure to implement a timely litigation hold amounted to gross negligence, the court awarded plaintiffs their costs and attorney’s fees.  Regarding the County’s failure to search for relevant ESI, the court declined to award sanctions in light of the County’s assertions that manual searches were undertaken, but ordered the County to confirm that their responses were complete.

During discovery, plaintiffs raised concerns regarding the sufficiency of the County’s responses.  Specifically, plaintiffs noted that the County’s response to interrogatories indicated that “it did not instruct any of the departments named in the complaint to preserve documents until September 12, 2006” – almost a year and a half after the complaint was filed.  Moreover, no action was taken regarding the location, protection, or restoration of ESI until December 22, 2006.  Accordingly, plaintiffs filed a motion for sanctions, specifically an adverse inference instruction.

A party seeking an adverse inference instruction must establish three elements:  “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.”

Addressing the duty to preserve, the court indicated that once the duty arises, “a litigant is expected, at the very least, to ‘suspend its routine document and retention/destruction and to put in place a litigation hold’” and to take affirmative action to prevent its systems from destroying routine information.  (Citation omitted.)  In this case, the duty to preserve arose when the complaint was filed in June 2005.

Despite the County’s numerous defenses, including that it was initially difficult to identify relevant individuals to place under hold and that quick action was taken upon denial of the its motion to dismiss, the court found that the County breached its duty to preserve.  Addressing the County’s assertion that a verbal hold was placed initially, the court questioned why the analysis leading to the placement of that hold could not also have been used to prevent the destruction of documents in those departments.  The court also observed that no evidence of follow up regarding the verbal hold was submitted.

Turning to the County’s state of mind, the court indicated that “in this circuit, this prong of spoliation can be ‘satisfied by a showing that evidence was knowingly…or recklessly destroyed.’”  The court determined that “[p]laintiffs’ position is well-supported by case law holding that failure to implement a litigation hold at the outset of litigation amounts to gross negligence.”  The court further noted counsel’s obligation to oversee compliance with such a hold once it is placed.  Accordingly, the court found that the County’s failure to implement a litigation hold amounted to gross negligence.

Specifically addressing the failure to suspend the routine destruction of ESI, the court noted that despite the County’s failure to explicitly suspend the destruction, it did maintain an automatic back up system.  The system, however, had “at least one gap” resulting in the loss of potentially relevant ESI.  Finding no indication that the gap was in any way intentional, however, the court found that the County’s failure to preserve email was, at most, negligent.

Finally turning to relevance, the court indicated that when requesting an adverse instruction, there are two avenues to showing the relevance of allegedly spoliated information:  “First it may be inferred if the spoliator is shown to have a sufficiently culpable state of mind” and “[t]he second way is for the moving party to submit ‘extrinsic evidence tending to demonstrate that the missing evidence would have been favorable to it.’”  In this case, plaintiffs’ arguments regarding relevance were limited to a statement in a footnote and the submission of five emails purported to establish that other contemporaneous documents were likely destroyed.  The court’s analysis of the emails, however, did not support the same conclusion and plaintiffs’ motion for an adverse inference was denied.

In light of its finding of gross negligence arising from the County’s failure to timely implement a litigation hold, though, the court ordered the County to pay plaintiffs’ costs for making the motion, including reasonable attorney’s fees.

The court then turned its discussion specifically to the County’s failure to timely search for potentially responsive ESI.  The County admitted that it did not possess the resources to locate and access non-email ESI.  Accordingly, plaintiffs argued that it was clear that the County never conducted a search for relevant ESI.  However, the County asserted it had instructed “the primary custodians and about 15 other individuals” to search their electronic documents and produce what was responsive.

In determining sanctions, the court noted that “Plaintiffs had not provided any case law suggesting that a ‘manual’ search of electronic files does not satisfy a party’s discovery obligations.”  The court also noted, however, that the County had provided differing information regarding the number of persons told to conduct a manual search.  Thus, defendants were directed to review and supplement their prior discovery responses and, if they were determined complete, to provide plaintiffs a letter to that effect.  No monetary or other sanctions were awarded.

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