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Timing Is Everything: SDNY Limits Relief for Plaintiffs Prematurely Seeking Serious ESI-Related Sanctions Under Rule 37(e)(2)

Author: Charlotte Howells – Gibbons Law Alert

…plaintiffs sought a mandatory adverse inference based on the claim that the defendants destroyed encryption keys needed to access the “MyWebDay” platform, an internal “shadow” accounting system used to track illicit bribe payments, which they contended contained evidence essential to the litigation. Despite ultimately admitting to destroying the encryption keys, the defendants argued that it was too early in discovery for the court to impose sanctions…
… The court ultimately concluded that the plaintiffs “have not shown, and cannot show, that defendants destroyed the physical encryption keys with the intent of depriving plaintiffs in this litigation of that evidence.” Observing that discovery was not yet complete, and the precise scope of the issues that would be presented to the jury was not yet known, the court limited sanctions to permitting the plaintiffs to present evidence and argument to the jury concerning the defendants’ intentional destruction of evidence, as well as permitting the jury to consider that evidence, along with all other evidence, in making its decision…

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Editor Comment:

Although it appears that the jury will hear about the defendants bad acts, I am disappointed that the court declined the harsher subsection (e)(2) because the plaintiffs did not have evidence of intent. This ruling could temp corporations to ‘lose’ encryption keys rather than deal with evidence. I bet that if you had all the various communications between the key players you would find some discussion outlining their intent and orders. It is always easier to play back seat driver when you are not elbow deep in a case. This somehow does not feel like discovery justice to me. How about you?

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