Court Finds that Defendant Corporations Falsified Electronic Wage and Hour Records

12 Oct 2016

In Ayala et. al. v. Your Favorite Auto Repair & Diagnostic Center, Inc. et. al., Case No. 14-5269 (E.D. N.Y., Sept. 16, 2016), Plaintiffs sued Defendants under the Fair Labor Standards Act and under New York’s state labor law, seeking to recover unpaid wages and overtime as well as other damages. Prior to trial, Plaintiffs filed a motion in limine seeking a default judgment against Defendants based upon spoliation of evidence.  Alternatively, Plaintiffs sought to prohibit Defendants from presenting electronic wage and hour records at trial and/or for an adverse inference instruction re the spoliation. Theses sanction requests were based upon evidence of alteration of the electronic records, and questions arising from allegations that a computer hard drive containing key data had been stolen. The court reserved decision until trial.

Defendants did not dispute that knowing they had an obligation to preserve evidence.  The court found that the “stolen” computer had been in Defendants’ possession, but that they took no steps to cooperate with the police to recover the computer. The court further determined that other records had been altered, and that Defendants had a motive to destroy the electronic versions of their records before a computer forensic expert could examine the server. The court noted that the Defendants ignored nine separate follow up attempts by the police re the computer theft. Based upon these findings, the held there to be sufficient culpability to rule that spoliation had occurred. In rendering its decision, the court declined to enter default judgment, but did rule to exclude the records from being presented as evidence at trial.

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