Case Law

Court Acts Under Its Own Power to Impose Sanctions for Intentional ESI Spoliation

New York

Hsueh v. N.Y. State Dep’t of Fin. Servs., 2017 WL 1194706 (S.D.N.Y. Mar. 31, 2017) In this sexual harassment case, the defendants moved the court to impose an adverse inference ruling against the plaintiff for deliberately destroying a recorded conversation between the plaintiff and the defendents’ HR representative. The defendants also requested attorney’s fees for the cost of a court-ordered second deposition because the plaintiff acted in bad faith during the first deposition by failing to acknowledge the recording and other relevant information. The plaintiff later admitted to recording the conversation and subsequently deleting it, because “it was hard to hear…..and [the plaintiff] didn’t know if it was legal to record someone without permission.” The plaintiff argued that FRCP 37(e) is the controlling law in this action, in that it allows a court to impose sanctions “[i]f electronically stored information that should have been preserved . . . is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery.” The plaintiff stated that because the plaintiff’s husband, an IT professional, was subsequently able to recover the deleted recording, sanctions were not appropriate. The defendant argued that Rule 37(e) does not apply to the present action because the plaintiff deliberately deleted the data, rather than simply “fail[ed] to take steps to preserve [it].” The court agreed with the defendant, issuing sanctions under its own inherent authority. The court applied the Second Circuit’s three-factor test to determine whether it could impose an adverse inference sanction: “1) that the party having control over the evidence had an obligation to preserve it at the time it was destroyed; (2) that the records were destroyed with a culpable state of mind; and (3) that the destroyed evidence was relevant to the party’s claim or defense such that a reasonable trier of fact could find that it would support that claim or defense.” The court found that the plaintiff knew she should have not deleted the recording, that the plaintiff deliberately destroyed the recording to prevent the defendants from obtaining it, and that the recording was relevant to the plaintiff’s claims against the defendants. The court held that the plaintiff acted in bad faith and granted the requested sanctions.

Keywords: Spoliation, duty to preserve, electronic recording, bad faith, sanctions, inherent authority