Culpability and Spoliation:
FRCP Rule 37(E) and New York Law

By Marc Pillinger.

Culpability is often a central issue in spoliation claims. In Sarach v M & T Bank Corp., 2016 NY Slip Op 04820 [4th Dept June 17, 2016], a recent Fourth Department case, the Court found that defendant’s violation of a CPLR 3102(c) Order for pre-action disclosure, wherein the defendant promised to preserve surveillance footage, amounted to a “willful failure to disclose.” The Fourth Department, however, disagreed with the lower court that the appropriate sanction was dismissal of the culpable party’s pleadings.  Finding instead that the aggrieved plaintiff was not “prejudicially bereft” of the means to prosecute his action, the Court held that an adverse inference sanction was most appropriate.

The dissent in Sarach is noteworthy for its reliance on Pegasus Aviation I, Inc. v Varig Logistica S.A., 26 N.Y.3d 543  [2015] , arguing that the majority failed to follow the Court of Appeals’ approach to  (i) making a finding of spoliation, and (ii) selecting the appropriate sanction.

While the dissent agreed that defendant had a duty to preserve the surveillance footage under the first prong of Pegasus[1], it found that the surveillance footage was negligently (not willfully) destroyed under normal business practices.   Instead of an adverse inference charge, the dissent opted for a lesser preclusion sanction that would have prevented the spoliating party from introducing evidence of the video’s content at trial.

The dissent’s view that “an adverse inference charge should not be given when…the sole basis for the imposition of a penalty is negligent conduct” is in line with the recently amended Federal Rule 37.  It further raises an important point of divergence between federal and state law.

With the advent of Rule 37(e) it is now the case under federal law that a negligent or grossly negligent level of culpability will not warrant an adverse inference sanction: “The Advisory Committee Notes on section (e)(2) of the new Rule—which provides that an adverse inference instruction is only warranted when the court finds that a spoliating party ‘acted with the intent to deprive another party of the information’s use in the litigation,’ Fed. R. Civ. P. 37(e)(2)—make clear that the new Rule 37 rejects cases such as Residential Funding Corp. v. DeGeorge Financial Corp., 306 F.3d 99 (2d Cir. 2002), that authorize the giving of adverse-inference instructions on a finding of negligence or gross negligence.” Thomas v Butkiewicus, 2016 WL 1718368, at *7 [D Conn Apr. 29, 2016].  Nonetheless as the dissent in Sarach notes, “Pegasus is controlling on this issue” and an adverse inference sanction may be granted when a party’s conduct is negligent under New York law.

We await to see whether New York courts will mirror Rule 37(e) or whether mere negligence will remain sufficient for the imposition of an adverse inference sanction.

If you wish to discuss this further, please feel free to contact us.

Pillinger Miller Tarallo LLP
570 Taxter Road
Elmsford, New York 10523
(914) 703-6300

[1] “A party that seeks sanctions for spoliation of evidence must show that the party having control over the evidence possessed an obligation to preserve it at the time of its destruction, that the evidence was destroyed with a ‘culpable state of mind,’ and ‘that the destroyed evidence was relevant to the party’s claim or defense such that the trier of fact could find that the evidence would support that claim or defense’ (VOOM HD Holdings LLC v. EchoStar Satellite L.L.C., 93 A.D.3d 33, 45, 939 N.Y.S.2d 321 [1st Dept.2012], quoting Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 220 [S.D.N.Y.2003] ). Where the evidence is determined to have been intentionally or wilfully destroyed, the relevancy of the destroyed documents is presumed (see Zubulake, 220 F.R.D. at 220). On the other hand, if the evidence is determined to have been negligently destroyed, the party seeking spoliation *548 sanctions must establish that the destroyed documents were relevant to the party’s claim or defense (see id.).”