Home > Discovery > Banking on an Adverse Inference – NY Appellate Division Affirms Spoliation Sanctions against Bank in Employment Discrimination Suit

Banking on an Adverse Inference – NY Appellate Division Affirms Spoliation Sanctions against Bank in Employment Discrimination Suit

by Christopher D. Dize

Spoliation is the intentional destruction or alteration of evidence.  If proved, a court may allow the jury to infer that the lost evidence was unfavorable to the party responsible.  This type of a sanction can be devastating.

In 2002, bank employee Jacob Ahroner was not happy with his employer, Israel Discount Bank of New York.  Consequently, in July 2003, he brought suit, alleging hostile work environment and discrimination based on race, age, and national origin.

In November 2002, seven months prior to filing the action, however, Ahroner’s attorney wrote to the Bank.  The letter placed the Bank on notice that

“[it] must undertake all efforts to preserve from spoliation all documents and other records relating to our client’s employment, as well as any unlawful conduct of [the Bank] or its employees.  As you may be aware, spoliation gives rise to an inference and instruction that the missing documents would have proved the charging party’s case.”

The Bank replied that it was aware of its obligations.

Notwithstanding this awareness – and notwithstanding a 2004 order from the trial court to produce emails relating to Ahroner’s discharge – emails, backup tapes, and the hard drive of the computer of Ahroner’s direct supervisor were at some point destroyed.  The hard drive allegedly had information relating to the Bank’s decision to terminate Ahroner’s employment.

In 2007, Ahroner’s attorney deposed the Bank’s vice president of information technology.  During the deposition, it came out that the Bank was in the process of upgrading its computer systems, but hard drives were not being preserved unless specifically requested.  The Bank’s VP of IT also revealed that he had never been asked whether he had “searched to see if there were any archived emails for the years 2002 or earlier relating to Ahroner.”  He apparently knew nothing of whether the Bank had or had not initiated a litigation hold.

Soon thereafter, the trial court expanded its 2004 order that the Bank was to produce all emails, notes, and correspondence regarding Ahroner’s termination.  Further, a few months after issuing the expanded production order, the court ordered the parties to have a forensic expert examine the computer hard drive of Ahroner’s direct supervisor.

In a showing of the highly contentious nature of the litigation, the parties could not agree on a forensic expert and the trial court selected one for them and set a date for the examination.  However, on the day set for the examination, the Bank indicated that it would not produce the hard drive, but rather the Bank stated that “consistent with the Bank’s retention practice, [the] hard drive was preserved by taking an image of that hard drive [to] be put aside to ensure no purging until the litigation was completed.” However, no image was ever actually taken.

Ahroner moved for spoliation sanctions based on the loss of evidence, and the trial judge granted.  The judge ruled that Ahroner should receive the benefit of “an adverse inference instruction at trial with respect to e-mails on [the Bank’s] hard drive.” The judge also allowed Ahroner “to seek a missing documents charge with respect to certain [documents] at the time of trial.” Finally, the judge directed the Bank “to reimburse plaintiff for the amount he paid to a forensic expert to examine [the] hard drive along with related attorneys’ fees.”

The appellate division had equally little sympathy for the Bank and unanimously affirmed all aspects of the lower court’s decision.

The appellate division first stated the legal rule.  When a party seeks spoliation sanctions involving the destruction of electronic evidence, it must establish three conditions:

(1) The party with control over the evidence had an obligation to preserve it at the time it was destroyed;

(2) The evidence was destroyed with a ‘culpable state of mind’ (including ordinary negligence); and

(3) The destroyed evidence was ‘relevant’ to the moving party’s claim or defense.”

After reviewing the record from the trial court, the appellate division found that the Bank had “control” over the hard drive.  The court also found that the Bank was “aware of [its] obligation to preserve” the hard drive.  Finally, the court found that the Bank had even been “directed by the [trial] court” to preserve the hard drive.

Although the Bank told the court that it would preserve the hard drive, the hard drive had been erased.  Furthermore, although the Bank claimed to have taken an image of the hard drive, the forensic expert later determined that it had not done so.

The appellate division had no trouble understanding why the trial court was “deeply disturbed” by these events.  Moreover, the appellate division held that “since the drive was destroyed either intentionally or as the result of gross negligence, [the trial court] properly drew an inference as to the relevance of the e-mails stored on the drive.”

The appellate division found that the sanctions imposed by the trial court were “proportionate” because they did “not permit the jury to infer that any e-mails on the drive would support plaintiff’s claims, but only that any e-mails would not support defendants’ defense or contradict plaintiff’s claims.”

[This case can be found at Ahroner v. Israel Discount Bank of New York, etc., et al., 2010 N.Y. App. Div. LEXIS 9087 (Dec. 7, 2010).]

Christopher Dize graduated summa cum laude from Salisbury University.  He will receive his J.D. from Seton Hall University School of Law in 2011.  After graduation, Chris will clerk for a judge of the Superior Court of New Jersey, Appellate Division.  He has also interned with judges of the United States District Court for the District of New Jersey, and he currently works for a litigation firm in New Jersey.

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