Reino de Espana v The American Bureau of Shipping, Inc., Case No. Civil 3573 (S.D.N.Y. Aug. 18, 2008)

In 2004 an oil tanker sank off the coast of Spain. Spain, as Plaintiff in this action, while apparently unhappy about the situation, has consistently refused to disclose electronic documents for the relevant time frames. In 2004, the Defendants first requested all non-privileged electronic documents for a nine-day period during which Spain took control of the tanker. Several orders from 2006-2007 have compelled discovery. Sanctions were granted against Spain for failure to provide such information and Spain appealed such an order.

After considering all the evidence in the original request for sanctions, the judge found that Spain’s dodging of the Federal Rules was sanctionable, Spain’s representations that further electronic documents did not exist were unconvincing, the Defendants’ discovery request was reasonable and limited, and Spain had failed to preserve electronic documents by neglecting to put in place a litigation hold.

Judge Ellis noted that Spain’s “failure to act timely [to preserve documents] supports the allegation that the lack of electronic records is a function of the failure to adequately preserve evidence, and not an indication that such records simply did not exist.

Opinion at 3, quoting Nov. 2 Order at 14.

The court affirmed that Spain had adequate notice that preservation and spoliation would be at issue. Judge Ellis noted, “…it’s my view that when a party is asked to produce documents it is always an issue whether or not…they adequately preserved them.” Also, “[Spain’s] failure to conduct a timely and effective search for electronic discovery records undermines Spain’s position [that it has produced all discovery records from the casualty period] and indicates that evidence related to the [tanker] was likely lost.” Opinion at 5-6, quoting Evid. Hrg. Tr. 42 and Nov. 3 Order at 8.

Neither judge found any humor in Spain’s failure to preserve evidence then when adequately warned to do so, thus the objections to the sanctions were overruled.

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