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Adverse Inference Instruction or Evidence Preclusion as Spoliation Sanction?

Posted on December 29th, 2014

What should one do when a computer containing highly-relevant electronically stored information (ESI) crashes? For a case where a poor judgment was made in response to a computer crash, see Dorchester Financial Holdings Corp. v. Banco BRJ S.A., No. 11-CV-1529(S.D.N.Y. Dec. 15, 2014).

Plaintiff alleged a contract with Defendant, who disputed the existence of a valid contract and claimed it was a counterfeit. Plaintiff’s attorney had documents and data saved on the hard drive of his personal computer. Before filing the lawsuit, he printed out a number of documents, including the contract and other documents “he believed would be beneficial” to his client. (Quotation taken from his deposition.) Other electronic data remained on the computer and was not printed.

The computer subsequently crashed. The attorney asked his brother-in-law, who was not a computer specialist, to examine the computer. His brother-in-law told him that the laptop was gone, and that he should take anything off that he needed. The attorney did not consult anyone else regarding the computer and destroyed the hard drive without making a back-up or attempting to save any data. Defendant only found out about the destroyed computer two years later in response to its ESI requests in litigation.

The magistrate found the actions constituted bad faith spoliation and imposed evidence preclusion of the printed-out documents as sanction. The district court reviewed this de novo and found:

  1. A duty to preserve the documents was in place when the computer was destroyed. The court noted it is widely known that simply because a personal computer crashes or stops working does not mean data cannot possibly be recovered.
  2. The attorney’s failure to even attempt to have the computer examined by a forensic expert after it crashed constituted gross negligence at a minimum. The court was also concerned that other litigants in the future might use a computer crash to destroy evidence or turn a blind eye if spoliation was not found here.
  3. The court assumed the lost data would be relevant to the defense. The attorney admitted he only printed out documents beneficial to Plaintiff and left other data on it. Further, the computer had contained the metadata from the contract that was in dispute, which was then irrevocably lost.

Although the court found grossly negligent spoliation, the court did not think evidence preclusion was the correct sanction. The court felt it would be too harsh on Plaintiff, as it would then include the contact in dispute, which would basically dismiss Plaintiff’s case. The court instead felt a mandatory adverse inference instruction was more appropriate, ordering the finder of fact to assume Plaintiff destroyed electronic evidence favorable to Defendant’s claim.

ILS – Plaintiff Electronic Discovery Experts

Did you know? Main causes of data loss: hardware malfunction, human error, software corruption, computer viruses and natural disasters.

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