On November 18, 2022, Justice Chan of the New York County Commercial Division issued a decision in SH575 Holdings LLC v. Reliable Abstract Co., L.L.C., 2022 NY Slip Op. 33968(U), sanctioning a party for failure to provide discovery but refusing to strike its pleadings, explaining:
CPLR 3126(3) provides that if a party refuses to obey an order for disclosure or willfully fails to disclose information which the court finds ought to have been disclosed pursuant to this article, the court may make such orders with regard to the failure or refusal as are just, including an order striking out pleadings or parts thereof, or staying further proceedings until the order is obeyed, or dismissing the action or any part thereof, or rendering a judgment by default against the disobedient party. Under CPLR_3126(1)(2), the court is also authorized to order that the issues encompassed by the disclosure demand be deemed resolved, in the favor of the party seeking the discovery or that the party be precluded from introducing certain evidence or from supporting or opposing certain claims. In addition, a monetary sanction of an award of reasonable attorneys’ fees and costs is appropriate under CPLR 3126 to compensate counsel for time expended related to a failure to provide discovery.
The drastic sanction of striking pleadings is justified only when the moving party shows conclusively that the failure to disclose was willful, contumacious or in bad faith. At the same time, if the credibility of court orders and the integrity of our judicial system are to be maintained, a litigant cannot ignore court orders with impunity.
Here, the Caller Defendants have prolonged this case by failing to produce the outstanding discovery as ordered by the court. They missed the discovery deadline by failing to produce discovery by December 3, 2021. And, after they were granted an extension to produce discovery by February 11, 2022, the production was incomplete. The Caller Defendants were granted until March 17, 2022, to produce the outstanding discovery, but failed to do so, and the parties consented to plaintiff moving for sanctions pursuant to CPLR 3126. It was only after plaintiff moved for sanctions that the Caller Defendants argued that their failure to comply with court ordered discovery should be excused because of their attorney’s workload. On May 9, 2022, after plaintiff’s sanctions motion was marked fully submitted, the Caller Defendants produced a supplemental discovery response. However, the response was deficient since it did not include most of the ESI sought by plaintiffs, except for some print outs, and appears to lack most, if any, internal emails.
Under these circumstances, plaintiffs’ request for discovery sanctions is granted to the extent of requiring the Caller Defendants (i) to pay the plaintiff reasonable attorney’s fees and expenses incurred on this motion, (ii) to supplement their document response, including by providing ESI in a readable and searchable format and providing an affidavit from a person with knowledge as to the devices searched and the format of the information on the devices, or, in the alternative, to furnish an affidavit from a representative of an e-discovery vendor or information technology expert who can attest to reviewing the relevant devices belonging to the Caller Defendants and Mr. Fried, the search terms used to obtain the information, the result of the search and whether any of the information has been deleted from the devices, and to the extent ESI cannot be provided in a readable and searchable format, the reason that it cannot be provided in such a format. Defense counsel shall provide plaintiff’s counsel with the credentials of the vendor or expert.
(Internal quotations and citations omitted).