A New York lawsuit involving diamond dealers and brokers sounds like it would be glamorous, doesn’t it? Well, not in this case. But there’s some primo spoliation action going on here, and that’s why it caught our attention. The case is Harry Weiss, Inc. v. Moskowitz, and it contains the kind of thing you never want to hear when you’re the plaintiff’s counsel. From the Appellate Division, First Department’s recent opinion:
More than two years into this litigation, plaintiff’s bookkeeper revealed at his deposition for the first time that certain electronic files that were created to track defendants’ commissions were either “lost” or “deleted” at the end of 2007 and 2008, after a copy of the file had been printed. The bookkeeper further testified that he created and kept all of plaintiff’s records on one computer, which had been in use for the last ten years. A month later, when defendants’ attorney sought to forensically examine the computer to determine if any of the deleted files could be restored, plaintiff’s bookkeeper claimed, for the first time, that the computer was “broken” and had been thrown away in late 2009 or early 2010, after the commencement of this action. Thereafter, the bookkeeper testified that numerous documents supporting plaintiff’s claim that defendants were not entitled to commissions could not be produced because they were stored only on the discarded computer.
Ouch. The lower court, which in that state is the New York Supreme Court (never not confusing), granted defendant’s motion for for spoliation sanctions, and this appeal followed. The instant court was equally unimpressed with plaintiff’s actions, finding “a higher degree of culpability than mere negligence”. It turns out that there had been many court orders, and a special master had been appointed, and yet plaintiff continued to drag its feet, never issuing a litigation hold “either written or oral”. The appeals court is able to uphold the lower court’s ”finding that plaintiff’s disposal of the subject computer was, at the very least, grossly negligent”.
How did plaintiff even attempt to question the spoliation finding? Its argument was that, since “many of the files” were printed out, and produced to defendants, no prejudice was caused. You can probably guess how that defense went:
[C]onverting the files from their native format to hard-copy form would have resulted in the loss of discoverable metadata.
Plaintiff’s actions were made worse by the fact that they “deprived defendants of the opportunity to have their own expert examine the computer to determine if the deleted files could be restored”.
This is a pretty textbook spoliation case that illustrates how not to handle discovery requests and the potential sanctions for doing so improperly. The upheld sanction in this case: preclusion “from offering any evidence and/or testimony at trial in opposition to defendants’ defenses and counterclaims, unanimously affirmed, with costs.”