A Preliminary Showing of Spoliation May Justify Discovery of the Opponent’s Litigation Hold

It is well established in case law that even if paper printouts of evidence have been produced, the loss or destruction of the associated electronically stored information (ESI) may be prejudicial. See, e.g., Harry Weiss, Inc. v. Moskowitz, 106 AD3d 668, 669, 966 N.Y.S.2d 76 (2013) (loss of computer). Whether the loss of evidence merits spoliation sanctions, and what sanctions would be appropriate, depends in large part on the custodian’s state of mind. Litigation hold instructions are relevant to the custodian’s state of mind. A New York Superior Court judge recently applied that doctrine in the instructional case of Radiation Oncology Servs. of Cent. N.Y., P.C. v. Our Lady of Lourdes Mem’l Hosp., Inc., 2020 NY Slip Op 20133, ¶ 2, 69 Misc. 3d 209, 126 N.Y.S.3d 873, 875 (Sup. Ct.) (decided June 9, 2020) (Masler, J.).

In Radiation Oncology, the plaintiff sued the hospital that terminated its contract, alleging an improper investigation and review process. In the course of discovery, the plaintiff found seven instances of deletion of ESI associated with emails and other documents relevant to the plaintiff’s allegations. In one instance, a recipient of a group email deleted it upon receipt. In a second instance, all ESI associated with an internal memorandum was deleted. In both instances, the hospital was able to produce paper printouts. The plaintiff argued that without the associated ESI, it was deprived of metadata that would show who else might have received and been influenced by the communications. The hospital resisted the plaintiff’s request for production of its litigation-hold instructions, creating an issue for the court to decide.

Judge Masler first noted that “[p]roduction of a litigation hold may be ordered upon a preliminary showing of spoliation because its scope and effect bear directly on the state of mind of the party with control of the destroyed evidence, which is a critical element in determining whether spoliation sanctions are warranted, and, if so, in assessing an appropriate sanction.” 126 N.Y.S.3d 873, 875. But production of a litigation hold may be precluded if the producing party can prove, “as a matter of law, at least one of the following elements for each item of destroyed evidence: (1) that they had no obligation to preserve the evidence at the time of its destruction; (2) that the evidence was destroyed through no fault or wrongdoing whatsoever, even negligence; or (3) that the missing evidence was not relevant to plaintiffs’ claims.” Id. At 876.

Judge Masler found that the hospital failed to meet its burden of proof. The hospital conceded that it had an obligation to preserve the evidence at the time of its destruction. The evidence also established that at least one instance of destruction was intentional. Finally, the hospital failed to prove that the lost ESI was not potentially relevant. The judge ordered that the litigation hold be produced, because the defendant’s actions made the hold relevant to the spoliation inquiry. He didn’t even need to consider all seven instances of loss. Two alone were sufficient to entitle the plaintiff to discover the hold.

The case illustrates several hazards whenever ESI is lost or destroyed. The loss or destruction of potentially relevant ESI—not necessarily relevant, but potentially relevant—shifts the burden of persuasion to the party who lost the evidence. The shift is forensic as well as psychological. Judge Masler spent no time dwelling on the finer points of metadata or ESI technology. The defendant deleted some evidence, the deletion was not entirely unintentional, and the evidence was potentially relevant. A “preliminary showing” is analogous to a showing of probable cause. It’s enough to pry open a privileged communication.

For client companies with multiple tiers of management, it is critical that the client understand the consequences of complacency at any level. It is critical for counsel to manage litigation holds as rigorously as field marshals. We are, more often than ever before, not just lawyers, but project managers. We need to learn that trade, too.