Litigation Holds and Preservation

A series of well-reasoned decisions recently issued by the New York County Supreme Court plumbed the nature of litigation holds and the preservation of electronically stored information (ESI), giving guidance to litigators with excellent practice tips. Some of the issues addressed were somewhat unusual, such as whether to require a litigation hold to a foreign company which did little business in New York state, and an entity’s partners’ personal responsibility to fund ESI expenses. Or they dealt with the more common concerns of preserving text messages and tape recordings stored on cell phones, the forensic review of a server when a litigation hold had not been implemented, the timing of when a litigation hold should have been put in place, or the insufficiency of the record to move for spoliation sanctions.

Foreign Company’s Preservation Trigger

In Global Access Inv. Advisor v. Lopes, 2017 NY Slip Op. 31173(U) (Sup. Ct. N.Y. Co. May 31, 2017) (J. Kalish), the court noted that the spoliation motion presented a “unique question” on the issue of what constitutes “notice” of an impending lawsuit upon a foreign company which did not have an extensive presence in New York or that solicited business as a general matter in New York, sufficient to trigger a potential party’s duty to preserve evidence in accordance with the statutory discovery requirements of New York. Plaintiffs asserted that Banif’s duty to preserve was triggered as of when a certain email was sent that a legal action was being commenced against it. The motion noted that Banif is a corporation organized under the laws of the Cayman Islands with its principal place of business there. Further, although the email informed Banif that plaintiff had commenced such a lawsuit, it did not indicate that Global had commenced the lawsuit in New York and did not direct Banif to preserve any evidence relevant to the lawsuit. As such, the court denied the spoliation motion, ruling that “there is no basis to conclude that Banif had any reason to believe that it would ever be subject to the discovery laws of the state of New York, had knowledge of or should have had knowledge of the discovery laws of the state of New York.”

Cellphones, Text Messages And Gmail