Defendant Fails to Show Plaintiff Destroyed ESI; Court Denies Motion for Spoliation Sanctions

3 Oct 2018

In World Trade Centers Association, Inc. v. The Port Authority of New York and New Jersey, No. 15 Civ. 7411 (S.D. N.Y. April 2, 2018), the United States District Court for the Southern District of New York denied Defendant’s Motion for Spoliation Sanctions on the grounds that Defendant failed to show that Plaintiff destroyed any ESI. The opinion provides insight into the quality of evidence required under the revised FRCP 37(e) to establish spoliation.

In 2015, World Trade Centers Association, Inc. (“Plaintiff”) brought this action against the Port Authority of New York and New Jersey (“Defendant”), alleging trademark infringement, unfair competition, and breach of contract claims. During discovery, Defendant learned that Plaintiff routinely destroyed documents from 2011 to 2014. Defendant then moved for spoliation sanctions pursuant to FRCP 37, arguing that Plaintiff had destroyed relevant ESI either negligently or in bad faith.

At the outset, the court held that Plaintiff’s duty to preserve evidence arose in January 2012 and that Plaintiff had implemented procedures sufficient to preserve all relevant documents by that time despite not formally implementing a litigation hold until September 2013.  The court then considered whether Defendant could show that Plaintiff had destroyed any relevant ESI. Defendant offered the following arguments to support its contention that Plaintiff destroyed or lost relevant ESI: (1) Plaintiff lost or destroyed ESI when it switched email and ESI server providers (from “EpiSolve to “mindSHIFT”) in 2011; (2) Plaintiff “washed” 25 “computer drives” during the relevant period; (3) Plaintiff did not put a litigation hold in place until after the duty to preserve arose; and (4) Plaintiff produced only a small amount of ESI from its executives.

First, Defendant argued that Plaintiff lost or destroyed ESI during the migration the EpiSolve system to the mindSHIFT system in 2011. Specifically, Defendant argued that Plaintiff must have destroyed ESI based on the fact that Plaintiff produced fewer relevant documents for the years preceding the change in vendors. In rejecting the argument, the court held that a necessary condition for imposing sanctions is that the moving party must first demonstrate the sought-after evidence existed in the first place. Without evidence that spoliation caused the lower number of documents, the Court held that the proffered evidence on its face appears in line with ordinary business practices.

Second, the court rejected Defendant’s argument that the presence of 25 “washed” hard drives demonstrates culpability. Without producing evidence that the drives contained relevant ESI in the first place, the fact that Plaintiff possessed “wiped” hard drives does not indicate foul play.

Third, the court rejected Defendant’s argument that ESI was likely destroyed because Plaintiff did not begin preserving ESI until August 2014, two years after Plaintiff should have implemented a litigation hold. Interestingly, the court held that while Plaintiff should have implemented a litigation hold in 2012, Defendant failed to present any evidence that relevant ESI was destroyed because of that.

Finally, the court rejected Defendant’s argument that Plaintiff ESI because Plaintiff produced only 279 and 104 relevant emails from of Plaintiff’s executive employees. Again, the court holds that Defendant’s proffered evidence proved nothing with respects to whether Plaintiff actually destroyed ESI.  Accordingly, the court denied Defendant’s motion.