On March 20, 2022, Justice Masley of the New York County Commercial Division issued a decision in RCSUS Inc. v. SGM Socher, Inc., 2022 NY Slip Op. 30926(U), holding that unintentional, but grossly negligent, deletion of e-mails was a sufficient basis for spoliation sanctions, explaining:
On a motion for spoliation sanctions, the moving party must establish that (1) the party with control over the evidence had an obligation to preserve it at the time it was destroyed; (2) the records were destroyed with a culpable state of mind, which may include ordinary negligence; and (3) the destroyed evidence was relevant to the moving party’s claim or defense. In deciding whether to impose sanctions, courts look to the extent that the spoliation of evidence may prejudice a party, and whether a particular sanction is necessary as a matter of elementary fairness. The burden is on the party requesting sanctions to make the requisite showing. Plaintiffs have sufficiently established that spoliation sanctions are appropriate for the loss of WhatsApp messages exchanged between Strauss and Greenwald during the Message Gap Period.
As to the second element, plaintiffs have met their burden that Greenwald destroyed the WhatsApp messages with a culpable state of mind. A culpable state of mind for purposes of a spoliation sanction includes ordinary negligence. Gross negligence means a failure to use even slight care, or conduct that is so careless as to show complete disregard for the rights and safety of others. Failures which support a finding of gross negligence, when the duty to preserve electronic data has been triggered, include: (1) the failure to issue a written litigation hold, when appropriate; (2) the failure to identify all of the key players and to ensure that their electronic and other records are preserved; and (3) the failure to cease the deletion of e-mail.
Although there was an oral litigation hold by Greenwald’s counsel to Greenwald, there is no evidence that a written litigation hold was ever issued. While written litigation holds are not required in every case,, a written litigation hold should have been issued here as SGM has two office locations in Delaware and New York and employs over thirty employees. A written litigation hold issued to defendants’ employees would have given Greenwald’s assistant notice not to delete apps and messages on Greenwald’s iPhone Further, Greenwald relinquished possession and/or control over his iPhone 5 and did nothing to prevent deletion of the WhatsApp messages, despite the fact the Greenwald admittedly used this iPhone 5 for business7 and despite that fact that he was told to maintain a litigation hold. This utter failure to preserve the WhatsApp messages stored on the iPhone 5 while under a litigation hold constitutes gross negligence. Defendants argue that Greenwald did not intentionally destroy the WhatsApp messages. Even if Greenwald believed that he had transferred the data from the old phone to the new one, his belief does not erase his gross negligence in giving his iPhone away after litigation was filed and counsel advised defendant to preserve, nor do any tardy attempts by defendants to recover the WhatsApp messages.
Finally, where evidence is negligently destroyed, the party seeking spoliation sanctions must establish that the destroyed documents were relevant to the party’s claim or defense. However, where the spoliation is the result of gross negligence, the relevance of the evidence lost or destroyed is presumed. Here, defendants have failed to meet their burden. Instead of rebutting the presumption, defendants focus on plaintiffs’ burden to show relevance, which is not the standard at issue here.
(Internal quotations and citations omitted) (emphasis added).
Thus, plaintiffs are entitled to an adverse inference precluding defendants from contesting that the payments made during the times of the deleted WhatsApp messages to Strauss were commission payments made for diverted sales that would have gone to plaintiffs but for defendants’ actions.