Bad faith or malevolent intent is not a requirement to support an adverse inference instruction for the deletion of electronically-stored information, United States District Judge Shira A. Scheindlin has ruled in Sekisui American Corporation v. Hart.1 Instead, the culpable state of mind that is required to support an adverse inference instruction is satisfied by a showing that the evidence was destroyed knowingly or negligently, even if the destruction of ESI was done without an intent to breach the duty to preserve the evidence.2
In Sekisui, the plaintiff-corporation sought to acquire a business venture from the defendants. The purchase agreement governing the sale of the entity contained certain representations, however the plaintiff felt that the defendant, as CEO of the entity, was not complying with those representations. The plaintiff then brought an action asserting claims for breach of contract and fraud. In November 2010, the plaintiff sent the defendants a Notice of Claim. However, five months after the notice was sent, the plaintiff instructed its IT vendor to delete email files in the plaintiff’s possession that had belonged to the defendants while employed at the company. Despite recommendations from the IT vendor against deletion, the plaintiff affirmed the order to delete the emails. In fact, a litigation hold was put into place until a full fifteen months after the Notice of Claim was sent to the defendants, and notice of the duty to preserve was not sent to the IT vendor until three months after the initial complaint was filed.
When an party wrongfully destroys evidence that might be relevant to a case, a court may allow an adverse inference instruction to be made to the jury. An adverse inference instruction permits the jury to presume that the evidence that was destroyed would have been favorable to the adverse party.3 In order for an adverse inference instruction to be made to the jury, the party seeking the instruction must show:
- The party with control over the evidence had a duty to preserve the evidence at the time it was destroyed,
- The evidence was destroyed with a culpable state of mind, and
- The destroyed evidence was relevant to the party’s claim or defense.4
Culpable State of Mind
In Sekisui, the plaintiff conceded that it had a duty to preserve the emails that were destroyed. Thus, the plaintiff’s argument hinged on whether it had a culpable state of mind when ordering that the emails be deleted, and whether there was a sufficient showing with regard to the relevancy of the emails.
The magistrate judge in Sekisui determined that an adverse inference instruction and sanctions were not appropriate because the plaintiff did not possess an intent to breach the preservation duty. However, Judge Scheindlin reversed, explaining that the state of mind requirement is satisfied by either an intent to destroy the evidence or negligence in its destruction. Thus, bad faith is not required to support the adverse inference; the intent to delete the ESI, even to make room on a cluttered server, is sufficient.5
Judge Scheindlin found that the plaintiff’s conduct rose to the level of gross negligence. The plaintiff’s employee had directed the IT vendor to permanently delete the custodian’s ESI, was “very certain” the data should be destroyed, and made the directive despite a recommendation from the vendor against such action. No back-up tapes were made of the emails. And although the plaintiff was able to produce some of the custodian’s emails that were printed off in hard copy prior to deletion, the value of these documents had been degraded because the metadata associated with those emails was no longer accessible.
Furthermore, the failure to implement appropriate document retention practices rose to the level of gross negligence. First, no litigation hold was issued until fifteen months after a Notice of Claim was sent from the plaintiff to the defendants. Obviously, plaintiff knew there was a possibility of future litigation, yet failed to issue a hold. Second, once the litigation hold was issued, plaintiff took another six months to notify the IT vendor.6
In order for an adverse inference instruction to be supported, the destroyed evidence must be shown to have been relevant to a claim or defense of the party seeking the instruction. Relevance in the context of an adverse inference instruction means that the party seeking the instruction must make a showing that the destroyed evidence would have been helpful to that party. However, courts must be careful not to hold prejudiced parties to too high of a burden, otherwise it runs the risk of allowing the party that destroyed the evidence to benefit from the destruction.7
When evidence is destroyed willfully, that fact alone is sufficient circumstantial evidence to support the presumption of relevancy necessary for the adverse inference instruction. Similarly, where the party that destroyed the evidence was grossly negligent, that gross negligence can in certain cases be sufficient circumstantial evidence to fulfill the relevancy requirement. Oftentimes, the same facts that support the state of mind requirement will be sufficient to support the relevancy factor.8
In Sekisui, Judge Scheindlin found no question that the destroyed ESI would have been relevant in the case. Her determination was based primarily on whose data was deleted. One custodian whose data was deleted was a defendant in the case and was unable to testify on his own behalf due to a cognitive disorder. Another custodian held a position at the company that was directly related to the claim in the action. Thus, a custodian’s ESI can be relevant to a case solely based on the relationship between the nature of the custodian’s position in the company and the claim asserted.
- 1:12-cv-03479-SAS-FM, (S.D.N.Y. August 15, 2013). [↩]
- Id. at *14 (quoting Residential Funding Corp., 306 F.3d 99, 108 (2d Cir. 2002) ). [↩]
- The jury is not required to accept the presumption. Instead, the jury is to weigh such factors as the egregiousness of the destroying party’s conduct in failing to preserve the evidence in deciding whether to accept the presumption. See Sekisui Amer. Corp. at *29-30. [↩]
- “[A] party seeking an adverse inference instruction based on the destruction of evidence must establish (1) that the party having control over the evidence had an obligation to preserve it at the time it as 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.” Residential Funding Corp. v. DeGeorge Financial Corp., 30 F.3d 99, 107 (2d Cir. 2002). [↩]
- Sekisui Amer. Corp. at *22-*23. [↩]
- Id. [↩]
- Residential Funding at 108-09. [↩]
- Id. at 109. [↩]