Voom Holdings LLC v. EchoStar Satellite LLC, —N.Y.S.2d—, 2012 WL 265833 (N.Y. App. Div. Jan. 31, 2012)
In this case, the appellate court held that the lower court “properly invoked the standard for preservation set forth in Zubulake v. UBS Warburg LLC”, which requires that a party place a litigation hold once it “reasonably anticipates litigation” and affirmed the lower court’s order imposing an adverse inference for defendant’s spoliation of ESI.
The parties to this action entered into a 15-year contract which governed EchoStar’s distribution of Voom HD’s television programming. Two years later, EchoStar began searching for ways to end the contract. On June 20, 2007, EchoStar’s corporate counsel sent Voom a letter expressing EchoStar’s belief that Voom had not fulfilled its contractual obligations and that EchoStar was therefore “entitled to terminate the Agreement.” Voom responded that it had fulfilled its contractual obligations, but EchoStar continued to pursue its termination efforts. On January 30, 2008, EchoStar formally terminated the parties’ agreement. The next day, Voom filed suit.
Despite significant lead up to the termination of the contract, EchoStar did not implement a litigation hold until after Voom filed suit. Four days later, a snapshot of relevant email accounts was taken. Four months later, EchoStar suspended the automatic deletion of emails. Until that time, EchoStar relied on its employees to identify emails relevant to the litigation and to preserve them by moving them to separate folders. Without such action, employees’ sent and deleted emails were permanently deleted after 7 days. In the course of discovery, certain emails were produced from EchoStar which Voom argued demonstrated that EchoStar should have anticipated litigation prior to Voom’s commencement of the action (thus triggering an obligation to preserve relevant evidence). Voom moved for spoliation sanctions. Notably, the highly relevant emails were available only because they had been preserved in email snapshots taken in connection with other litigation.