Voom HD Holdings LLC v. EchoStar Satellite LLC, 2012 NY Slip Op 00658 (January 31, 2012)
A unanimous opinion out of a New York state appellate court in the Voom v. EchoStar is the first case at this level to explicitly uphold the standards set forth by U.S. District Judge Shira Scheindlin in Zubulake and Pension Committee. In the opinion, penned by Associate Justice Sallie Manzanet-Daniels of the New York Appellate Division of the Supreme Court, First Judicial Department, the justices upheld a lower court opinion that Echostar was “grossly negligent for failing to implement a litigation hold” and “that an adverse inference charge was an appropriate spoliation sanction.”
The matter commenced in February 2008 when EchoStar ended its $2.5 billion contract with Voom for broadcast rights to Voom’s programming. Voom sought sanctions for spoliation because EchoStar failed to issue a legal hold once litigation could be “reasonably anticipated” and failed to suspend automatic email deletion until four months after the suit was filed resulting in a loss of relevant emails.
Justice Manzanet-Daniels wrote in the opinion which upheld the November 2011 ruling by Manhattan Supreme Court Justice Richard Lowe the following:
This case requires us to determine the scope of a party’s duties in the electronic discovery context, and the appropriate sanction for failure to preserve electronically stored information (ESI). We hold that in deciding these questions, the motion court properly invoked the standard for preservation set forth in [Zubulake and Pension Committee], which has been widely adopted by federal and state courts. In Zubulake, the federal district court stated, “Once a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a litigation hold’ to ensure the preservation of relevant documents” (Zubulake, 220 FRD at 218).
The Zubulake standard is harmonious with New York precedent in the traditional discovery context, and provides litigants with sufficient certainty as to the nature of their obligations in the electronic discovery context and when those obligations are triggered.
This case is important for a couple of different reasons. First, EchoStar attempted to argue that Zubulake was “vague and unworkable” not providing guidelines for what ‘reasonable anticipation of litigation’ means. The appellate court unanimously rejected EchoStar’s argument, stating that the standard is already enforced in all four of the federal district courts and that ‘reasonable anticipation’ can be defined as “such time when a party is on notice of a credible probability that it will become involved in litigation.”
The other noteworthy point is that EchoStar had made this mistake and been sanctioned before, in 2005. The courts were aware and took notice that they had failed to correct an unacceptable practice that affected their current situation.
As Jonathan Sablone, et al., of Nixon Peabody wrote in their February 13 recap of Voom v. Echostar:
[T]he EchoStar court brought some long-awaited clarity to e-discovery law in New York State courts when it explained exactly what needs to be included in a “litigation hold.”
This decision by the New York Appeals Court is an emphatic reminder that courts will continue to impose sanctions for failure to preserve electronic data when litigation is imminent. Measures must be taken to have a legal hold process firmly in place and this is standard is continuing to permeate the U.S. judicial system – now to the state level – and the punishment, in this case an adverse inference instruction, can be severe.
Further Reading:
- Pierson, Brendan, “State Panel Adopts ‘Zubulake’ in Faulting Handling of E-Mails,” New York Law Journal, February 2, 2012
- Sablone, Jonathan, Constance Boland, Jacob Herstek and Kevin Sanders, “The Zubulake Preservation Standard Now Applies in the First Department,” Electronic Discovery and Evidence Law Alert, Nixon Peabody, February 13, 2012
