Ecor Solutions, Inc. v State of New YorkAnnotate this Case
Decided on October 31, 2007
Ecor Solutions, Inc. f/k/a ERM C & O Services, Inc., Claimant,
State of New York, Department of Environmental Conservation, Defendant.
ERNSTROM & DRESTE, LLP
By: John W. Dreste, Esq.
HON. ANDREW M. CUOMO
New York State Attorney General
By: Eidin Beirne, Esq., Assistant Attorney General
Frank P. Milano, J.
Claimant ECOR Solutions, Inc. f/k/a ERM C & O Services, Inc. (ECOR) moves pursuant to CPLR 3126 to preclude the defendant State of New York from offering as evidence at trial any reference to or use of undisclosed electronic mail or document, to preclude any reference to the contents of the computer hard-drive which claimant provided to the defendant's agent, Malcolm Pirnie, Inc. (MPI) (and further requests in its reply papers an in camera inspection of this computer's hard-drive), and to preclude, due to the defendant's loss of the Department of Environmental Conservation (DEC) internal investigation file, "defendant from offering any evidence that ECOR allegedly violated health and safety obligations, including but not limited to alleged dust/particulate monitoring exceedences." Claimant alternatively requests that the Court order that an adverse inference is warranted against the defendant "with regard to the issues for which [c]laimant has been deprived of evidence."
The claim alleges that claimant was wrongfully terminated by the defendant with respect to an environmental remediation contract awarded to claimant after a public bid process. The claim further alleges that the defendant breached the contract, which involved the remediation of a former industrial site in Greene County, New York (project). Defendant has counterclaimed [*2]against claimant to recover for costs incurred in completing the unfinished contractual work after contract termination.
Claimant was terminated from the project in April of 2002 and claimant served and filed this claim against defendant in August of 2002.
The defendant retained MPI to act as its consulting engineer with respect to the project. Pursuant to the contract, claimant furnished MPI an on-site computer (the MPI computer). Claimant contends that the defendant's employees and MPI used the on-site computer, among other computers, to maintain information about the project and to communicate among themselves and with MPI, via electronic mail. Claimant further contends that defendant lost an internal investigation file compiled by DEC with respect to allegations that claimant was overcharging the defendant and that claimant violated certain health and safety obligations, including the emission of unsafe levels of carbon monoxide caused by the treatment of the industrial site soil.
Claimant served its first "Request for Production of Documents" on November 21, 2002, demanding that defendant produce all project related e-mail and other electronic correspondence, data contained in the MPI computer and the DEC investigation file. Defendant made numerous objections to claimant's discovery demands, generally characterizing the demands as "vague, overly broad, excessively burdensome and palpably improper." The parties subsequently agreed to continue with the discovery process "unless and until it becomes necessary" for the claimant to address the defendant's objections by motion. Pursuant to this agreement, the defendant produced records for inspection and copying by the claimant, even as the parties exchanged correspondence related to defendant's objections to the discovery demands.
In May of 2003 claimant requested production of the MPI computer. The computer and its hard-drive were inspected by claimant's expert on July 8, 2003. Claimant was thereafter informed by its expert that "massive deletions of data occurred on March 28, 2003 and June 10, 2003."
Claimant's "2nd Notice for Discovery and Inspection" was served on November 13, 2003. Defendant again made numerous objections to the discovery demands, primarily claiming that the demands were "vague, overly broad and burdensome." On December 30, 2003, defendant advised claimant of the "unavailability of e-mail requested by Claimant due to the [defendant's] e-mail retention policies." The result of the retention policy was that the "longest possible lifespan of an e-mail on a DEC server (including backup) would be 1 year and 14 days."
Claimant made another demand for production of relevant e-mail correspondence on or about March 30, 2005. Defendant again made numerous objections to the discovery demands, generally stating that the demands were "vague, overly broad, excessively burdensome and improper."
On March 23, 2006, with respect to claimant's long-standing demand for the DEC investigation file, defendant advised claimant that a "DEC search has revealed no [investigation] file such as that referred to by [DEC investigator] Channing at his deposition." On May 23, 2006, defendant advised claimant that "[r]egarding investigation file referred to by [DEC investigator] Conroy, search of records center (cold storage) at State Office Campus came up with nothing in trace under Conroy's name. I have asked that a similar search be done for legal files also retired to records center on the chance that file might be there." Ultimately, the [*3]defendant was unable to produce a copy of the DEC investigation file.
Despite the defendant's ongoing CPLR 3122 objections and the issues detailed above with respect to the MPI computer and the DEC investigation file, the parties engaged in extensive and voluminous discovery proceedings between November of 2002 and October 31, 2006, when claimant filed a note of issue in which it certified that discovery proceedings known to be necessary were complete and that the claim was ready for trial. In addition, both parties moved for summary judgment (defendant on April 2, 2004 and claimant on June 9, 2004) without any apparent reference to spoliation of evidence.
A conference was held on June 29, 2007, in which trial was scheduled to commence on October 22, 2007 and to continue for at least 36 days of testimony. The Court was not advised of any dispute between the parties with respect to the allegedly completed discovery proceedings nor was the Court advised that claimant intended to seek sanctions against defendant pursuant to CPLR 3126 with respect to claimant's demands for electronic evidence, the alleged deletions to the MPI computer and the loss of the DEC investigation file. The court directed that a pretrial conference would be held October 15, 2007.
On September 17, 2007, the claimant requested that an earlier conference be held and a telephone conference was conducted on September 25, 2007. At the conference, the claimant advised the Court that it intended to make the present motion for sanctions against defendant. The Court directed that the motion be made returnable on October 15, 2007.
Claimant alleges that the defendant failed to preserve relevant evidence which purportedly existed on the MPI computer prior to deletion and failed to preserve allegedly relevant electronic mail deleted pursuant to the DEC retention policy. Claimant offers no proof that any specific electronic mail or document was spoliated, instead relying on testimony of DEC investigator Conroy that "[t]here must have been some," and that he "probably" received and sent electronic mail that "had to be case-related."
In opposition, defendant offers the affidavit of Professional Engineer Michael Mason, employed by the defendant as DEC project manager for the subject remediation project. Mason swears that his project communications with the MPI representative, David Hiss, "were made personally or by phone. I have no recollection of exchanging any e-mail with Mr. Hiss to/from the site trailer in which the on-site computer was utilized." Mason further swears that all his "communications with [DEC investigator] Conroy pertinent to the . . . project were made in person or over the phone. I had no e-mail communication with him at any time relative to the project."
Defendant also offers the affirmation of DEC attorney Meta R. Murray with respect to e-mail communications. Murray states that her legal assistant requested, on December 9, 2002, that DEC investigator Conroy provide to her "any e-mails related to the project' as defined in the Claimant's [discovery] demand." The e-mails located by Conroy were apparently thereafter provided to claimant in response to the discovery demand.
With respect to the MPI computer, claimant was afforded an opportunity for its expert to examine the hard-drive on July 8, 2003. The hard-drive was "ghosted" by claimant's expert for further examination. Claimant's expert later informed claimant that "massive" hard-drive deletions occurred on March 28, 2003 and June 10, 2003 and smaller deletions occurred "on various dates between [claimant's] Notice (May 19) and the ultimate date of inspection (July 8)." [*4]Claimant's expert was apparently unable to identify any relevant electronic mail or document that had been deleted.
DEC project manager Mason states in his affidavit that he was advised of the scheduled
inspection of the MPI computer in May or June of 2003. He notified the MPI site representative
of the pending inspection and:
"[I]nstructed that the computer be boxed and sent to my office in Albany. This was done. The computer was stored under my desk until the day of inspection by Claimant's representatives. At no time in that period did I as much as hook the computer up to a power source, never mind retrieve, interfere with or remove information from its hard drive."
After claimant's inspection of the MPI computer, Mason stored the computer until it was turned over to DEC Information Technology Specialist Lee Shepard in the summer of 2006.
According to Murray's affirmation, she asked Shepard in the summer of 2006 to investigate the MPI computer to determine if any files had been mass deleted on March 28, 2003 and June 10, 2003. Shepard determined that the MPI computer was not password protected and there were no "means to block access to the computer." Shepard further determined that of 3566 deletions identified on the computer, only 37 occurred on March 28, 2003 and June 10, 2003. Of those 37, "the vast majority were created by the System or internet activity . . . ." The report generated by Shepard demonstrated that there were, according to Murray, "numerous [deleted] files which have names which clearly indicate personal internet use such as hotjobs', columbiahouse', jcpenny' (sic), predatormastersforum', girlswho cry' etc., . . . ."
Claimant also asserts that the defendant erased the hard-drive of Conroy's computer (the Conroy computer) upon Conroy's retirement on May 13, 2004. Claimant offers no proof that any specific, previously undisclosed relevant electronic mail or document was not preserved and/or not previously provided to claimant.
Claimant further alleges that defendant failed to preserve the DEC investigation file, which was apparently compiled just prior to and after the contract termination of claimant in April 2002. This file appears to have been created in contemplation of charging claimant with criminal violations for overcharging defendant for contract work. According to the deposition testimony of DEC investigator Conroy, the DEC file also included information regarding "air violations." DEC investigator Channing, also deposed by claimant, testified that the DEC investigation file was "about ECOR Solutions. It had . . . a log of their burning entries, and it also had some notes in it that looked to be a chronological order of things that had happened between the department and ECOR."
Investigator Conroy apparently determined that the alleged contractual overcharging and/or "air violations" did not support felony charges and the file was referred to DEC investigator Channing for potential misdemeanor charges. DEC filed two accusatory instruments in Coxsackie Village Court against claimant which were withdrawn approximately one month after filing (all of this activity taking place in March and April, 2002).
DEC Project Manager Mason, who allegedly compiled and provided the now-missing DEC
file to Conroy, states in his affidavit as follows:
"By the terms of its contract Claimant was required to provide the State with, among other [*5]things, documentation of readings from a instrument to detect emissions of carbon monoxide from the soil treatment process. Several of such readings furnished by Claimant showed that CO emissions exceeded permitted levels. I provided Joseph Conroy (DEC investigator) with the read-outs given to the State by Claimant. I also gave Mr. Conroy a tabulation of these readings that I had compiled. I say and believe that it was this documentation that Mr. Conroy described as the quarter-inch file containing dates, times, etc. given to him by me. (Dreste affidavit, para. 25, Exhibit H). I believe this is the same burning "log" referred to by DEC investigator Norman Channing, which he estimated to be a half-inch thick (Dreste affidavit, para. 27, Exhibit I)."
"It is by now well settled that courts have discretion to impose sanctions under CPLR 3126 when a party intentionally, contumaciously or in bad faith fails to comply with a discovery order or destroys evidence prior to an adversary's inspection . . . We have agreed that such sanctions might even be appropriate for the negligent disposal of evidence deemed crucial to the underlying action when the adversary had not been given an opportunity for inspection . . ." (Puccia v Farley, 261 AD2d 83, 85 [3d Dept 1999]; see Steuhl v Home Therapy Equipment, Inc., 23 AD3d 825 [3d Dept 2005]; Dobson v Gioia, 39 AD3d 995 [3d Dept 2007]).
Puccia further instructs, at p. 85, that "[t]rial courts are given broad discretion to determine when and to what extent a discovery sanction should be imposed. Such determination must remain undisturbed unless there is a clear abuse of discretion . . . Although reluctant to strike a pleading absent a willful or contumacious failure to facilitate discovery . . . courts will look to the extent that the spoliation of evidence may prejudice a party and whether a dismissal will be necessary as a matter of elementary fairness'"(citing Kirkland v New York City Hous. Auth., 236 AD2d 170, 175 [1st Dept 1997]).
Among other remedies, the trial court "has discretion to impose sanctions for the spoliation of evidence by striking a party's pleading or instructing the jury that it may draw negative inferences from the missing evidence (see CPLR 3126; PJI3d 1:77 )" (Lawrence Ins. Group, Inc. v KPMG Peat Marwick L.L.P., 5 AD3d 918, 920 [3d Dept 2004]).
Just recently, the Court of Appeals has reminded that "[w]hen parties involved in litigation engage in the destruction of evidence, a number of remedial options are provided by existing New York statutory and common law. Under CPLR 3126, if a court finds that a party destroyed evidence that ought to have been disclosed . . . , the court may make such orders with regard to the failure or refusal as are just.' New York courts therefore possess broad discretion to provide proportionate relief to the party deprived of the lost evidence, such as precluding proof favorable to the spoliator to restore balance to the litigation, requiring the spoliator to pay costs to the injured party associated with the development of replacement evidence, or employing an adverse inference instruction at the trial of the action" (Ortega v City of New York, 2007 NY Slip Op 07741 ).
The Ortega court went on to note that " [o]ur traditional method of dealing with spoliation of evidence in New York has been CPLR 3126 where sanctions, including dismissal, have been imposed for a party's failure to disclose relevant evidence'" (citing MetLife Auto & Home v Joe Basil Chevrolet, 1 NY3d 478, 482-483 ).
While it has been held that "[i]n the absence of pending litigation or notice of a specific claim, a defendant should not be sanctioned for discarding items in good faith and pursuant to its normal business practices" (Conderman v Rochester Gas & Elec. Corp., 262 AD2d 1068, 1070 [*6][4th Dept 1999]), it is equally clear that the "fact that relevant information is destroyed before a notice or order to produce is served does not preclude application of sanctions under CPLR 3126" (Hallock v Bogart, 206 AD2d 735, 736 [3d Dept 1994]).
It is incumbent on the proponent of a motion seeking sanctions for spoliation to prove that the evidence allegedly lost or destroyed actually existed, that it was under the opposing party's control and that there is no reasonable explanation for the failure to produce the evidence. (Wilkie v New York City Health and Hospitals Corp., 274 AD2d 474 [2nd Dept 2000], lv denied 96 NY2d 705 ; see Osinski v Taefi, 13 AD3d 1205, 1206 [4th Dept 2004]).
In Tri-County Motors, Inc. v American Suzuki Motor Corp. (494 F Supp 2d 161, 177
[EDNY 2007]), the court stated that:
"As an initial matter, the Court observes that Tri-County has not proffered a scintilla of evidence that the alleged missing e-mails ever existed in the first place. Tri-County simply speculates that they may have existed given "Suzuki's [allegedly] clear pattern of creating lies about Tri-County's application and [of] withholding prejudicial documents," as well as the fact that, it claims, Borromeo was a more frequent user of e-mail than he acknowledged at deposition. . . . Such speculative assertions as to the existence of documents do not suffice to sustain a motion for spoliation of evidence."
The court may decline to impose a sanction where the proponent fails to show that prejudice resulted from the purported loss or destruction of evidence (Gilbert v Albany Medical Center A C & S, Inc., 13 AD3d 753, 754-755 [3d Dept 2004]; Miller v Weyerhaeuser Co., 3 AD3d 627 [3d Dept 2004], lv dismissed 3 NY3d 701 , appeal dismissed 5 NY3d 822 ).
Where other evidence exists which is sufficient to establish the claim or defense of the proponent of a spoliation motion, sanctions may be denied (Denoyelles v Gallagher, 40 AD3d 1027 [2d Dept 2007]; Myers v Sadlor, 16 AD3d 257, 258 [1st Dept 2005]).
The filing of a note of issue and its attendant certification of completion of discovery and readiness for trial may waive the right to seek sanctions, including those for spoliation of evidence (Gitlitz v Latham Process Corp., 258 AD2d 391 [1st Dept 1999]). Inordinate delay in seeking sanctions for the negligent loss of relevant evidence may also result in denial of the motion (Ortiz v Board of Educ. of City of New York, 26 AD3d 158, 159 [1st Dept 2006]).
With the foregoing facts and principles in mind, the Court finds that the motion should be granted in part and denied in part.
There can be no dispute that defendant should be, and hereby is, precluded from offering as
evidence at trial any reference to or use of undisclosed electronic mail or documents, if any, from
whatever source. Claimant is not,however, entitled to an adverse inference with respect to
allegedly spoliated electronic mail or documents. While the Court notes the defendant's apparent
failure to place a litigation hold on, or otherwise modify, its e-mail retention policy with regard to
project communications during the course of the litigation, no proof has been offered by claimant
beyond surmise and conjecture that any previously undisclosed, relevant electronic
communications or documents existed and were spoliated, to its prejudice.
Further, despite unfettered access, neither party's computer expert identified deletion of any relevant evidence from the MPI computer. Significantly, there is no evidence offered of any [*7]deletions made by the defendant as opposed to non-party MPI, or some other third-party with access to the non-password protected computer at the project site. In addition to failing to demonstrate, as required, that defendant had exclusive control over the MPI computer, claimant's attempt to characterize deletions from the computer's hard-drive as "massive" is a mischaracterization and further, many of the deletions, clearly, were of non-relevant files.
Claimant's most recent request for an in camera inspection of the MPI computer is denied. First, during discovery, an expert retained by claimant inspected the computer in July 2003. Second, claimant's request is barred by the filing of the note of issue and certificate of readiness on October 31, 2006, since claimant has not shown that "unusual or unanticipated circumstances" (22 NYCRR 202.21 [d]) regarding the MPI computer developed subsequent to the filing of the note of issue (see Feldman v New York State Bridge Authority, 40 AD3d 1303, 1305 [3d Dept 2007]).
With respect to the erasure of the Conroy computer upon his retirement in 2004, the record shows that it was investigator Conroy himself who was directed in December of 2002 to locate "any e-mails related to the project' as defined in the Claimant's demand." No proof whatsoever has been offered to show that the Conroy computer contained any relevant electronic information beyond that which had already been preserved and/or previously (or subsequently) provided to claimant, in response to claimant's 2002 demand.
Accordingly, therequest for relief involving the MPI computer and the Conroy computer is denied.
The loss of the DEC investigation file is particularly problematic. The file, without dispute, existed and was clearly relevant, in that it contained information which was the basis for criminal charges eventually filed (and later withdrawn) against claimant. Moreover, defendant admits it contained information concerning health and safety standards (and claimant's efforts in that regard) to which claimant would be held under the contract. However, the record also shows that it consisted principally of documents provided to defendant by claimant: The monitoring data compiled by claimant with respect to dust and carbon monoxide emissions, as described by Conroy and Mason, as well as the claimant's burning log described by Channing and Mason.
Part of the DEC investigation file involved documents created by Mr. Mason of the DEC and part involved documents provided to the defendant by claimant itself. The defendant is precluded from any use at trial of that portion of the lost DEC investigation file comprised of undisclosed chronologies, tabulations, notes or narratives created by DEC Project Manager Mason.
As set forth above, some evidence in the DEC investigation file appears to be documents created by claimant itself which are presumably still in claimant's possession. Documents which still exist cannot be found to have been spoliated. The Court, therefore, will not preclude the defendant from "offering any evidence that ECOR allegedly violated health and safety obligations, including but not limited to alleged dust/particulate monitoring exceedences," as demanded in the wherefore clause of claimant's motion.
Despite claimant's lateness in seeking relief, a sanction is warranted for the unexplained loss of the DEC investigation file. The record indicates that the DEC file was prepared in contemplation of criminal charges being filed against claimant with respect to over-reporting (and therefore, overcharging) of soil removal and further involved some compilation of [*8]information relevant to claimant's obligation to meet health and safety obligations under the contract.
Claimant is therefore entitled to an inferencethat thatportion of the DEC investigation file comprised of undisclosed Mason-created chronologies, tabulations, notes or narratives, did not support defendant's assertion against claimant of over-reporting of soil removal and/or of claimant's failure to meet its health and safety contractual obligations.
The motion is denied in part and granted in part, as set forth above.