The Appellate Division, Fourth Department, in Buffalo Biodiesel, Inc. v. Blue Bridge Fin., LLC,1 recently affirmed a trial court’s striking of a plaintiff’s complaint as a sanction for the plaintiff’s failure to maintain discoverable evidence demanded by the defendant. In so holding, the Fourth Department highlighted how the striking of a party’s pleading may be warranted under CPLR 3126 where the spoliation of evidence is willful or deprives an adverse party of the means to prove a claim or defense.
In Buffalo Biodiesel, Inc., the plaintiff asserted various causes of action arising out of allegations that the defendant sent an email to a financial services company falsely characterizing a pending legal dispute between the parties. At the time the parties proceeded with written discovery, the only remaining causes of action were for libel and tortious interference with business relations.
In the course of written discovery, the defendant demanded all communications between the plaintiff and the financial services company. In response to this demand, the plaintiff initially indicated that it no longer had any such communications in its possession. The plaintiff later confirmed that it had failed to issue a litigation hold, and all such communications with the financial services company had been deleted either by the plaintiff directly or with the plaintiff’s permission while this action was ongoing. The plaintiff’s subsequent attempt to obtain the communications via subpoena from the non-party financial services company was unsuccessful as well.
The defendant moved for spoliation sanctions under CPLR 3126. The trial court granted this motion, striking the plaintiff’s complaint and dismissing the action with prejudice.
The Fourth Department affirmed, reasoning that a court has broad discretion to award sanctions for a party’s negligent or intentional destruction of key evidence, including the striking of a pleading where the destruction was willful or deprived a party of the means to prove a claim or defense.
The court explained that the plaintiff’s failure to issue a litigation hold amounted to grossly negligent spoliation of evidence, and the trial court thus did not abuse its discretion in striking the complaint. Of note, with this decision, the court rejected the plaintiff’s argument that the defendant was required to prove the relevance of the deleted communications, as the plaintiff’s gross negligence in deleting these emails authorized the trial court to draw an inference as to the relevance of these emails.
The Fourth Department’s decision underscores the importance of preserving all relevant and discoverable information at the outset of any legal dispute, along with the potentially dispositive consequences for failing to do so.
If you have any questions regarding the content of this alert, please contact Matthew Larkin, Torts & Products Liability Defense Practice Area chair, at mlarkin@barclaydamon.com; Jessica Tariq, counsel, at jtariq@barclaydamon.com; or another member of the firm’s Torts & Products Liability Defense Practice Area.
12024 N.Y. App. Div. LEXIS 3307 (4th Dep’t June 14, 2024).