County’s “Foot Dragging” in Discovery and Failure to Implement Legal Hold Warrant Monetary Sanctions, but not Default Judgment or Adverse Inference Instruction

Toussie v. County of Suffolk, 2007 WL 4565160 (E.D.N.Y. Dec. 21, 2007)

In this case, plaintiffs alleged that their civil rights had been violated when the defendants denied them the opportunity to purchase real estate at auction.  The email dispute was first brought to the court’s attention in August 2006, when the plaintiffs moved to compel supplemental discovery responses from the County.  Plaintiffs’ counsel argued that the County had failed to perform a diligent search for responsive documents, evidenced by the fact that it had only produced two emails.  During a conference with the court on the matter, counsel for the County suggested that since it was "more the exception than the rule," that employees were "communicating be email," a further search was unlikely to uncover additional emails.  However, because it became clear that the County had failed to conduct a system wide search for responsive emails, the court directed the County to have its Information Technology Department search the County’s servers for responsive emails.

In October 2006, plaintiffs moved for sanctions, contending that the County had willfully failed to comply with the court’s order.  In response, the County submitted an affidavit from its Director of Management Information Services, explaining that the County lacked the resources to perform the court-ordered search for additional emails.  He estimated that the cost to restore the County’s backed up data would be roughly $36,000, and that the process would take as much as 1,700 man hours.

Upon receipt of the County’s response, the court held another conference, during which the court expressed its exasperation with the County’s position by noting:  “You can’t just throw up your hands and say we don’t store [e-mails] in an accessible form and then expect everybody to walk away.”  The court narrowed the scope of the email search to be conducted, and directed the County to prepare a search plan.  The search plan was to include an estimate of the cost, manpower, and time needed to conduct a search for emails responsive to 35 search terms on the servers of five key County departments for a particular time period.

The County thereafter advised the court in a letter that, in order to perform the search, it would be necessary to restore 470 backup tapes, and that the new system required to conduct the search would cost approximately $934,000.  The County estimated that the search would take 960 man hours to complete.  The County also noted that it had explored the possibility of hiring an outside consultant to perform the search and learned that to do so would cost between $617,000 and $672,000.

Additional conferences with the court were held on the subject, and the County ultimately hired an outside vendor to perform the search.  In the end, the vendor restored 417 backup tapes and yielded 2,403 pages of emails and attachments to those emails, of which approximately 200 were withheld on the basis of privilege, “a far cry from the two e-mails originally produced by the County.”

Plaintiffs remained unsatisfied with the production, and argued that even after the restoration, the County’s total production could not possibly represent the emails exchanged by dozens of people in the targeted departments.  They noted, for example, that according to other documents produced, one of the key players should alone have had 1,200 emails in his inbox.  Plaintiffs also argued that the destruction of emails was evident from the fact that the County was able to produce emails sent from one key player to another, but the email that should have been received was missing.

Plaintiffs argued that had the County implemented a litigation hold and discontinued its practice of overwriting tapes, more relevant emails would have been preserved.  Consequently, plaintiffs requested that default judgment be entered against the defendants or, in the alternative, that an adverse instruction be given to the jury chosen to hear the case.  The County denied any spoliation and claimed that it made enormous efforts, at a substantial monetary cost, to fulfill its obligations and that there was no destruction or untimely production of evidence.

Citing Zubulake v. UBS Warburg LLC, 229 F.R.D. 422 (S.D.N.Y. 2004), the court observed that plaintiffs needed to establish three elements in order to obtain spoliation sanctions:  (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 duty to preserve arose when the complaint was filed, and that the County was then under an obligation to preserve any “unique” and “relevant” evidence.  “Simply stated, any documents prepared by or for County employees, employed in the four key departments, which involved the Toussie transactions, should have been preserved.”  The court concluded that the County had breached its duty to preserve in a number of respects.  Among other things, it did nothing to alter its document retention policy to insure the availability of relevant discovery.  Further, even after the County had received a document request, key personnel remained free to delete documents from the system because the County failed to put in place a litigation hold.

The court found that the second element had also been established, as the County’s failure to implement a litigation hold amounted to gross negligence, and its failure to preserve all potentially relevant backup tapes was “merely negligent.” 

However, the court found that plaintiffs had not adequately established the relevance of the missing emails:

There is no question that the County’s early foot dragging delayed this litigation and that the County failed to implement a litigation hold.  This conduct, however, does not rise to the egregious level seen in cases where relevance is determined as a matter of law.  The courts analysis, thus, turns to the extrinsic evidence offered by the plaintiffs to show that the destroyed e-mails would have been favorable to their case.

The court evaluated six emails plaintiffs had attached to their briefing, and found that, if anything, the emails were more helpful to the defense. The court concluded:

While the evidence is clear that at least 9% of the back up tapes were destroyed and the plaintiffs may be correct that e-mails have been deleted by users, there is no reason to believe that any of those e-mails would have provided any additional support of plaintiffs’ claims.  Accordingly, the plaintiffs have not sufficiently demonstrated that the destroyed/lost emails were favorable or relevant and the motion for a default judgment or an adverse inference instruction is denied.

The court went on to award plaintiffs their costs associated with the email dispute:

Although the plaintiffs have not provided sufficient evidence of relevance to warrant an adverse inference instruction, the County was initially recalcitrant in meeting its discovery obligations.  The County’s lack of diligence is evidenced by the fact that the County first took the position that it would not uncover more than the two e-mails initially produced.  In addition, counsel for the County first became aware that its back up tapes were damaged by a 2004 flood six months into these proceedings.  There is no question that until the February 2007 hearing, the plaintiffs were required to expend resources in litigation in order to obtain the e-mails that have now been produced, and thus, those costs are compensable.  Accordingly, the County shall also reimburse the plaintiffs for the costs associated with their appearance at the hearings dated November 21st and December 4th, as well as the preparation of their January 4, 2007 application.  The plaintiffs shall submit an affidavit to the court setting forth those costs by January 11, 2008.

(Citations omitted.)