Despite late legal hold, no relevant evidence lost

World Trade Ctrs. Assoc., Inc. v. Port Auth. of N.Y. & N.J., No. 15 Civ. 7411 (LTS) (RWL) (S.D.N.Y. Apr. 2, 2018).

In this trademark infringement case, the court denied sanctions despite the plaintiff’s negligent preservation of documents because the defendant failed to prove that relevant evidence was destroyed.

This case’s roots trace back to 1961, when the Port Authority first used the “WORLD TRADE CENTER” mark. Over 50 years later, the plaintiff, the World Trade Center Association, Inc. (“WTCA”), claimed that the Port Authority unlawfully infringed its mark and breached their contract.

Starting in 2011, the parties had a “disagreement” over the Port Authority’s use of the WORLD TRADE CENTER trademark. On January 12, 2012, the WTCA sent a letter to the Port Authority warning that it would “take all necessary steps to protect its Marks.” That letter explicitly referenced seeking “judicial intervention” if the Port Authority continued using the contested marks.

The WTCA filed suit in September 2015. In May 2017, the Port Authority “learned that [the] WTCA routinely destroyed documents from 2011 to 2014,” including after its duty to preserve began. The Port Authority moved for sanctions for that alleged spoliation. Specifically, the Port Authority argued that the WTCA destroyed paper files, lost emails when it changed providers, “washed” 25 computers, and lost electronically stored information (ESI) in a server migration.

The assigned magistrate recommended denying the Port Authority’s motion for spoliation sanctions. Neither party filed an objection. Finding no clear error, the district court adopted the magistrate’s recommendation in full.

The court found that the “WTCA’s duty to preserve evidence” began in early 2012, when it sent the letter threatening legal action. The WTCA acknowledged that it did not implement a legal hold until September 2013. Yet, that fact alone, the court noted, didn’t mean that the “WTCA failed to implement appropriate preservation” efforts.

The court concluded that, in fact, the “WTCA implemented procedures sufficient to preserve relevant” documents and ESI. Further, “no evidence” supported the Port Authority’s claim that the WTCA actually lost “any relevant material.”

As to physical evidence, the court agreed that the WTCA destroyed paper documents during a 2013 office move. Those actions “were at least negligent,” but the court found no evidence that the WTCA acted in bad faith. Nor was there any evidence that any discarded documents were relevant to the dispute. Indeed, the WTCA’s counsel “expressly instructed” the moving contractor to retain “anything relating to trademark” or other key terms. The court rejected as “conclusory” the Port Authority’s suggestion to the contrary.

Turning to the WTCA’s ESI retention efforts, the court first considered which version of Federal Rule of Civil Procedure 37(e) should apply. Although the WTCA filed its case in 2015, under the old rules, the motion for spoliation arose in 2017. Seeing “no reason” that application of the new rule would be “unjust or impracticable,” the court applied the amended Rule 37(e).

Which rule applied mattered little, though. The court again found “no indication” that the WTCA destroyed relevant ESI. In the email provider changeover, the WTCA created an email backup. Its chief legal officer submitted a declaration confirming that no emails appeared to have been lost. That transition also occurred in 2011, before any duty to preserve evidence arose.

Similarly, the court found the Port Authority’s assertion that the WTCA lost evidence when it “washed” 25 hard drives “entirely speculative.” The WTCA declared that it had copied those hard drives onto a server before wiping them.

Finally, considering the server migration, the court saw no evidence that any ESI was destroyed, much less relevant ESI. The Port Authority objected that “only 279 relevant emails were produced” from one custodian. But “these numbers prove nothing” by themselves. Rather, the court noted, the “WTCA preserved and reviewed 206,124 electronic documents,” indicating that relevance, rather than preservation, may be to blame for the low volume.

Simply put, the court cannot impose spoliation sanctions where no spoliation has occurred. The court denied the Port Authority’s motion for sanctions.

Takeaways on Demonstrating a Strong Preservation Effort

Here, the WTCA’s preservation effort was weak, even negligent, as shown by the nearly two-year delay before it implemented a legal hold. Although the court concluded that no relevant evidence was lost, the outcome could have easily been quite different. Don’t take the same chance: once you’ve identified a trigger event indicating that litigation is reasonably likely, promptly issue a legal hold. While additional steps may also be needed, this initial hold gets your preservation off to a solid start.

Questions about preserving ESI? We’re here to help you identify, scope, and preserve all the ESI you need for your next ediscovery matter, starting with issuing an efficient and comprehensive legal hold.

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