On January, 31, 2012, the Appellate Division, First Department, became the first New York appellate court to adopt the standard for spoliation originally established in Zubulake v. UBS Warburg LLC, 220 F.R.D. 212 (S.D.N.Y. 2003). Applying Zubulake’s “reasonable anticipation trigger for preservation” standard, the panel in Voom HD Holdings LLC v. EchoStar Satellite LLC, No. 600292/08, 2012 N.Y. Slip Op 00658 (App. Div. 2012) unanimously held that EchoStar Satellite breached its preservation duty, and affirmed an adverse-inference sanction.
The litigation concerns a 2005 contract between Voom HD and EchoStar Satellite, whereby EchoStar agreed to distribute Voom’s programming through its “Dish Network” service. In the contract, EchoStar agreed to include Voom channels as part of its standard package, and not “tier” it or charge a fee. EchoStar retained the right to terminate if Voom failed to spend $100 million on the service in any calendar year.
Voom alleges that in mid-2007 EchoStar decided that the contract was a bad business decision, but sought to justify its termination by falsely claiming that Voom had failed to meet its programming and spending obligations. In addition, Voom alleges that in June 2007, EchoStar began analyzing its legal remedies in regard to a possible breach of contract.