Spoliation Of System Metadata Is Sanctionable Despite Delayed Request For Information

A New York Supreme Court judge has reminded parties to be extremely careful in discarding computer system components during the pendency of litigation.  In a March 30, 2016 opinion in Ferrara Bros. Building Materials Corp., et ano v. FMC Construction LLC, et ano, Sup. Ct., Queens Co., Index No. 16452/2007, the Court sanctioned a defendant for allegedly swapping out an older computer system for a newer one while discovery was still pending, even though a request for metadata on the computer had not been made at the time of the replacement.

In Ferrara, plaintiff sought damages for breach of its contract with defendant FMC Construction LLC (“FMC”) to provide concrete for a construction project (the “Ferrara Contract”) based, inter alia, on the alleged interference of defendant Casa Redimix Concrete Corp. (“Casa”).  In its defense, Casa alleged that it had entered into its own contract with FMC to provide the same concrete (the “Casa Contract”) on a date earlier than that set forth in the Ferrara Contract.  Later in the case, while discovery was still pending, plaintiff requested metadata related to the creation of the subject documents constituting the Casa Contract.  Casa responded by providing some document metadata, but stating that the computers and servers on which the document had been created had been replaced as part of an alleged company-wide technical upgrade.  This replacement had resulted in the loss of valuable and relevant “system metadata” capable of showing the author, date and time of creation, as well as the dates of any revisions of the contested documents.  Plaintiff then moved for sanctions regarding the spoliation of such evidence.  Casa opposed the motion by arguing that there was no bad faith intent to destroy the evidence, that it should not be penalized because the request had not been made by Ferrara until years after the case had begun, and that, in any event, the evidence was not relevant.

In its thoroughly researched opinion, the Court first went through the legal precedent reviewing metadata as discoverable evidence and then noted that there was no issue that the metadata at issue had been destroyed. Thus, the only questions to be determined were whether Casa knew or should have known the destroyed material was relevant, whether any delay by plaintiff to request the metadata waived plaintiff’s right to the request, and what sanction, if any, was appropriate.  The Court ruled that, given the question of alleged back-dating of the Casa Contract, the “system metadata” was clearly relevant to the case.

The Court quickly dispatched Casa’s arguments that plaintiff’s requests for the metadata were somehow untimely, noting that “Casa has not cited, nor has the Court found, any case, that stands for the proposition that a party may discard relevant evidence during the pendency of a litigation if opposing counsel waited until years later in the lawsuit to request it.” The Court further noted that Casa had not shown that maintaining the replaced system in storage would be “impractical or cumbersome.”  The Court thus held that Casa had not rebutted the presumption that it was “negligent, even grossly negligent” in allowing the evidence to be destroyed.  The Court then, after first noting that plaintiff would still be able to prosecute its case, even if imperfectly, ruled that a jury charge for an adverse inference at trial would be an appropriate sanction.

The Ferrara opinion clearly puts parties on notice that relevant electronically stored information (“ESI”), including both document and system metadata, need to be preserved during the pendency of litigation. Document holds, suspension of routine or automated electronic records destruction systems and the preservation of appropriate hard drives and computers in the event of technology replacement or upgrades are all available to ensure that appropriate evidence is preserved.  Indeed, as the Ferrara court noted, the mere copying of hard drives or documents from a computer system does not automatically preserve all relevant metadata.  Both the parties and their attorneys are required to do more than that to ensure that ESI remains viable and discoverable.

In short, in addition to any other strategies, clients should consult with their attorneys regarding any technology upgrades or replacement when litigation is on-going to avoid a spoliation scenario.

(Rich, Intelisano & Katz, L.L.P. is counsel of record to plaintiffs in the Ferrara case.)