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Exhibit A
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SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF SUFFOLK
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ALBERT PEREZ, individually and derivatively : MOTION SEQ #007
on behalf of TOTAL COMPUTER SOFTWARE, LLC, :
:
Plaintiff, :
-against- : Index No.: 063193/2013
:
VINCENT TEDESCO, TOTAL COMPUTER : Justice Assigned:
SYSTEMS, LTD. d/b/a TOTAL COMPUTER : Hon. Jerry Garguilo
GROUP, TOTAL COMPUTER GROUP, LLC, :
TOTAL COMPUTERS, LTD. And JOHN DOE : DECISION AND
CORPORATION, : ORDER OF DISCOVERY
: REFEREE
Defendants and :
:
TOTAL COMPUTER SOFTWARE, LLC, :
:
Nominal-Defendant. :
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TOTAL COMPUTER SOFTWARE, LLC, :
:
Third-Party Plaintiff, :
:
-against- :
:
ALBERT PEREZ, :
:
Third-Party Defendant. :
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By Order of the Honorable Jerry Garguilo J.S.C., dated March 18, 2016, the undersigned
was appointed as Referee to supervise all remaining discovery issues in this case pursuant to CPLR
§ 3104. By Notice of Motion dated October 29, 2018 [Motion #007], Plaintiff requests an Order,
pursuant to CPLR § 3126 and 22 NYCRR § 130-1.12, dismissing Defendant’s Answer and Third-
Party Complaint or precluding Defendants from introducing any evidence with regard to
outstanding discovery upon the grounds that Defendants have failed to comply with the directives
of the Court regarding discovery, have spoliated financial records, emails and other ESI materials,
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and have engaged in unlawful surveillance of Plaintiff’s privileged work product and attorney
client communications. Motion #007 has been referred to the undersigned for determination.
A conference call was held on March 18, 2019 with counsel for the respective parties
regarding Plaintiff’s Motion #007. Subsequently, to facilitate a determination of the motion by
focusing the parties’ respective arguments on the precise evidence claimed to have been spoliated
and/or not disclosed by defendants, by Decision and Order dated March 27, 2019 [Doc. No. 279]
Plaintiff was ordered to serve and file an inventory that separately identified every item he
contends has been spoliated and/or not disclosed (without additional legal arguments in support
thereof). The inventory was to contain, for each separately stated item: (1) citations to Plaintiff’s
motion papers that support the claim that the item has been spoliated and/or not disclosed; (2) a
statement explaining the relevancy of each item to the remaining issues to be tried that are specified
in the Court’s Decision/Order After Framed Issue Hearing dated July 12, 2018 (Doc. No. 201) and
are otherwise relevant to the remaining causes of action in the Second Amended Complaint and in
the Third-Party Complaint and Answer; and (3) a statement whether each of the enumerated
spoliation issues can be decided on the motion papers or whether any of the claims require a
hearing. Defendants were ordered to respond to each item on Plaintiff’s inventory following the
same format. The parties were also directed to serve and file memoranda not exceeding 15-pages
in length addressing the following issues: Has Plaintiff waived any of the claims of spoliation and
for sanctions raised in Motion #007 because those claims were not raised at or prior to the framed
issue hearing, and has Plaintiff been prejudiced by the claimed spoliation of evidence? In this
regard, it was noted that the Decision/Order After Framed Issue Hearing dated July 12, 2018 (Doc.
No. 201) states that “the parties introduced evidence in support of other claims including the
propriety of the distribution (from an accounting standpoint), the bona fides of the calculations
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used to arrive at the distribution, alleged discrepancies in the bookkeeping and record-keeping
concerning revenue and debt of the relevant entities, fiduciary and contract issues,” and also states
that “the parties exhausted themselves with testimony and exhibits addressing the bona fides of
the books, records, adjustments, as well as contractual ramifications stemming from the
agreements signed by the relevant parties.” [at p.3 of 10 and at p.10 of 10]. During the conference
call on March 18, 2019, Plaintiff’s counsel acknowledged that he did not raise the issue of
spoliation of evidence at the framed issue hearing. The parties were also directed to address the
necessity of Motion #007 and the relief requested by Plaintiff in view of the Plaintiff’s apparent
ability to submit evidence at the framed issue hearing on the question of the propriety of the
disbursement of the $8 million sale proceeds without objection that Plaintiff was hampered in
doing so by the spoliation of evidence.
Pursuant to CPLR 2219(a), the papers that have been considered in deciding referred
Motion #007 are (references are to Document Numbers on the NYSCEF Document List for this
electronically filed commercial action): Notice of Motion dated October 29, 2018 (Doc. No. 207);
affirmation in support of motion by Timothy McEnaney, Esq., together with Exhibits A-M
annexed thereto (Doc. Nos. 208-221 and 223); transmittal affirmation of Aaron E. Zerykier, Esq.,
in opposition to Plaintiff’s motion for spoliation and other sanctions, together with the affidavits
and affirmation and Exhibits annexed thereto as Exhibits A-LL (Doc. Nos. 224-266); the reply
affirmation by Timothy McEnaney, Esq., together with Exhibits A-D annexed thereto (Doc. Nos.
268-272); sur-reply affidavit of Michael Graziano (Doc. No. 273); sur-reply affidavit of Vincent
Tedesco (Doc. No. 274); sur-reply affirmation of Aaron E. Zerykier, Esq. (Doc. No. 275); email
of Timothy McEnaney, Esq., dated January 30, 2019 addressing sur-reply papers; email of Aaron
E. Zerykier, Esq., dated January 30, 2019 responding to Mr. McEnaney’s email; Plaintiff’s
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Memorandum of Law together with Exhibits A-S annexed thereto (Doc. Nos. 281-300); Plaintiff’s
Inventory of Spoliated Evidence (Doc. No. 302); Defendants’ Response to Plaintiff’s Spoliation
Inventory (Doc. No. 303); Defendants Memorandum of Law together with Exhibits 1-14 annexed
thereto (Doc Nos. 304-318); email of Viktoriya Liberchuk, Esq., dated June 17, 2019, with
attached page 331 of the Framed Issue Hearing transcript; emails of Timothy McEnaney, Esq., and
Aaron Zerykier, Esq., both dated June 18, 2019, regarding email search protocol; email of Timothy
McEnaney, Esq., dated June 18, 2019, responding to question about possession of unauthenticated
email server; emails of Timothy McEnaney, Esq., dated July 10, 2019 regarding plaintiff’s
Inventory Item #8 and regarding inspection of the email server; corrected plaintiff’s Exhibit I (Doc.
No. 321); and email of Aaron Zerykier dated August 5, 2019 providing defendants’ additional
comments on plaintiff’s spoliation Item #9
PRIOR PROCEEDINGS
The nature and scope of the dispute between the parties and the general principles
governing the resolution of discovery disputes, including the discovery of electronically stored
information (ESI) and the discovery of emails, were addressed in the Decision and Order of
Discovery Referee dated July 15, 2016 (Doc. No. 132) and will not be repeated herein except as
otherwise related herein.
This action was commenced by the filing of a summons and complaint on October 4, 2013
(Doc. No. 1). Process was served on October 10, 2013 (Doc. No. 2). On June 26, 2013, prior to
the commencement of litigation, counsel for Perez sent a letter by certified mail to defendant Total
Computer Software, LLC, attention defendant Vincent Tedesco, demanding a formal accounting
of the financial transactions and affairs of Total Computer Software, LLC and of the distribution
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of the proceeds of the sale to Tiburon which is the subject of this action. See, Exhibit E annexed
to the McEnaney affidavit (Doc. No. 213).
By Decision and Order of Discovery Referee dated September 13, 2016 (Doc. No. 160),
additional rulings were made on the discovery of emails.
By Stipulation and Order e-filed on October 17, 2016 (Doc. No. 167), the parties agreed
on a protocol for the discovery of ESI pertaining to the “Old” Great Plains Data, the “New” Great
Plains Data, and the ConnectWise Data.
By Decision and Order of Discovery Referee dated November 30, 2016 (Doc. No. 168),
the parties were directed to meet and confer and to provide a joint report to the Discovery Referee
regarding plaintiff’s allegations that Total Parties spoliated electronic evidence by wiping data
from the “Old” Great Plains, the “New” Great Plains, and the ConnectWise databases.
By Decision and Order of Discovery Referee dated December 16, 2016 (Doc. No. 169), a
protocol for the discovery of emails contained on the Group email server that was agreed to by the
parties was “so ordered.”
By Decision/Order After Framed Issue Hearing dated July 12, 2018 (Doc. No. 201), the
Court (Hon. Jerry Garguilo, J.S.C.) determined where the $8 million that was paid to the Software
entity (Total Computer Software, LLC) for the application (the asset) known as “Total
Enforcement,” went. The Court noted in the Decision/Order that during the framed issue hearing,
the “[p]arties addressed the ‘why it [the $8 million] shouldn’t have gone there’ question as well
[at p. 2]”, and that “the parties introduced evidence in support of other claims including the
propriety of the distribution (from an accounting standpoint), the bona fides of the calculations
used to arrive at the distribution, alleged discrepancies in the bookkeeping and record-keeping
concerning revenue and debt of the relevant entities, fiduciary and contract issues [at p.3].” The
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Court also noted in the Decision/Order that there was an “extensive record” pertaining to the
“propriety of the disbursement of the $8 million” and stated that the Court would, upon the consent
of the parties, “render[] a determination as to all remaining allegations concerning the propriety of
the disbursement of the $8 million and; whether or not the Plaintiff is entitled to more money than
that alleged by the Defendants [at p.3].” The parties did not consent to the Court’s suggestion and
the remaining issues will proceed to trial following the determination of Motion #007. The
Decision/Order also identified the following specific issues for further proceedings:
1. Mr. Ross’s findings of a $5,800,000.00 loss [n.4 at p.6]; and
2. Plaintiff’s “claim that the books were cooked and/or doctored” [n.6 at p.8].
During the Framed Issue Hearing, the Asset Purchase Agreement was put into evidence
and was referred to as the “written consent action of members of Total Computer Software, LLC.
[at p.5].” As to that document, the Court found [at p.5]:
that the unanimous consent document unambiguously established
that Plaintiff ratified all actions taken by Tedesco as President of
Software and authorized, confirmed, ratified and approved any other
agreements, certificates, instruments, consents, promissory notes,
notices, financing statements, waivers and other documents to which
the Company was a party, and the transaction of actions and
instructions contemplated by or incident to the foregoing.
After making that finding, the Court rejected plaintiff’s suggestion “that he should be
exempt from the consequences of signing the purported unanimous consent document because he
was not provided with a full copy of the unanimous consent until after the litigation commenced
and therefore could not have ratified the transactions at issue [at p.5].” The Court therefore found
that “the Plaintiff had actual notice of all the transactions he now contests [at p.5].”
To the extent that defendants are arguing in opposition to plaintiff’s motion that the
discovery that plaintiff is seeking is not relevant to plaintiff’s remaining claims by reason of the
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Court’s rulings in Decision/Order After Framed Issue Hearing dated July 12, 2018 (Doc. No. 201),
i.e., that “the unanimous consent document unambiguously established that Plaintiff ratified all
actions taken by Tedesco as President of Software,” that contention necessarily involves a
determination of the scope and effect of the Court’s ruling and deference is given to the Trial Judge
to determine that issue.
PLAINTIFF’S SPOLIATION INVENTORY AND DEFENDANT’S RESPONSE
Plaintiff has identified fourteen evidentiary items that he claims were spoliated and/or not
disclosed by Defendants. Defendants have denied those allegations in their responses to each item.
This Decision and Order is guided by the contentions of the parties in their respective inventories,
which are set forth as a composite in Appendix A to this Decision and Order and are incorporated
by reference herein [sections including citations to the record for evidence in support of the
contentions, and some footnotes, have been omitted; all typographical errors are carried over from
the Word files that the parties submitted at the request of the Discovery Referee].
PRINCIPLES OF LAW
In Sanders v. 210 N. 12th Street, LLC, 171 A.D.3d 966, 98 N.Y.S.3d 118 (2d Dept. 2019),
plaintiff allegedly was injured on January 26, 2016 when he slipped and fell on a patch of ice as
he was exiting the defendant’s building. Prior to the commencement of the personal injury action,
defendant provided plaintiff’s employer with a two-minute clip of video surveillance footage
depicting the plaintiff’s accident. The personal injury action was subsequently commenced on
June 22, 2016. Plaintiff moved, inter alia, pursuant to CPLR §3101(i) to compel defendant to
produce all of the video surveillance footage taken on the date of the accident, or pursuant to CPLR
3126 to preclude the defendant from introducing evidence at trial of matters pertaining to any
destroyed video surveillance footage or to direct that a negative inference charge be given against
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the defendant at trial on the ground of spoliation of evidence. Defendant stated that the remaining
video surveillance footage was automatically deleted 30 days after the accident. Plaintiff’s counsel
produced an unsigned letter dated February 23, 2016 purportedly sent to the defendant requesting
that the defendant preserve the video and surveillance films showing the location of the accident
for 6 hours before and 2 hours after the accident for any lawsuit that may be commenced.
Defendant’s attorney denied that the defendant received that letter. The Judicial Hearing Officer
granted that branch of the plaintiff’s motion which was pursuant to CPLR §3126 to impose
sanctions on the defendant to the extent of precluding the defendant from offering the video
surveillance footage of the accident into evidence at trial and referred that branch of the plaintiff’s
motion which was for an adverse inference charge to the Justice of the Supreme Court presiding
at trial. The Appellate Division, Second Department, reversed the order and determined that those
branches of plaintiff’s motion which were pursuant to CPLR §3126 to impose sanctions on the
defendant for spoliation of evidence should have been denied. The Appellate Division’s summary
of the doctrine of spoliation is controlling for purposes of deciding Perez’s motion for spoliation:
“Under the common-law doctrine of spoliation, when a party
negligently loses or intentionally destroys key evidence, the
responsible party may be sanctioned under CPLR 3126” (Holland v
W.M. Realty Mgt., Inc., 64 AD3d 627, 629 [2009]). “A party that
seeks sanctions for spoliation of evidence must show that the party
having control over the evidence possessed an obligation to preserve
it at the time of its destruction, that the evidence was destroyed with
a culpable state of mind, and that the destroyed evidence was
relevant to the party's claim or defense such that the trier of fact
could find that the evidence would support that claim or defense”
(Pegasus Aviation I, Inc. v Varig Logistica S.A., 26 NY3d 543, 547
[2015] [internal quotation marks omitted]; see Tanner v Bethpage
Union Free Sch. Dist., 161 AD3d 1210, 1211 [2018]; Aponte v
Clove Lakes Health Care & Rehabilitation Ctr., Inc., 153 AD3d
593, 593-594 [2017]). In the absence of pending litigation or notice
of a specific claim, a defendant should not be sanctioned for
discarding items in good faith and pursuant to its normal business
practices (see Tanner v Bethpage Union Free Sch. Dist., 161 AD3d
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at 1211; Aponte v Clove Lakes Health Care & Rehabilitation Ctr.,
Inc., 153 AD3d at 594; Biniachvili v Yeshivat Shaare Torah, Inc.,
120 AD3d 605, 606 [2014]; Lovell v United Skates of Am., Inc., 28
AD3d 721 [2006]).
171 A.D.3d at 968, 98 N.Y.S.3d at 120.
After stating the applicable principles, the Appellate Division then found, in a discussion
that is not pertinent to consideration of Perez’s motion, that plaintiff was not entitled to the
presumption of receipt by defendant of the letter requesting the preservation of the video
surveillance footage and, as a result, plaintiff did not establish that the defendant failed to preserve
all of the surveillance video footage. 171 A.D.3d at 968-969; 98 N.Y.S.3d at 121. After the
Appellate Division made that determination, the Court then stated that,
In any event, the plaintiff did not demonstrate that the defendant's
failure to preserve all of the video surveillance footage fatally
compromised his ability to prove his claim (see Doviak v Finkelstein
& Partners, LLP, 137 AD3d 843, 846-847 [2016]; cf. Jennings v
Orange Regional Med. Ctr., 102 AD3d 654, 656 [2013]; Mendez v
La Guacatala, Inc., 95 AD3d 1084, 1085 [2012]).
171 A.D.3d at 969; 98 N.Y.S.3d at 121.
The Appellate Division, Second Department, has applied these same principles in other
decisions that it has rendered concerning the imposition of sanctions for the spoliation of evidence.
E.g., Squillacioti v. Independent Group Home Living Program, Inc., 167 A.D.3d 673, 674-6765,
90 N.Y.S.3d 51, 53-54 (2d Dept. 2018); Franco Belli Plumbing and Heating and Sons, Inc. v.
Dimino, 164 A.D.3d 1309, 1313, 84 N.Y.S.3d 195, 199-200 (2d Dept. 2018); SM v. Plainedge
Union Free School District, 162 A.D.3d 814, 817-819, 79 N.Y.S.3d 215, 219-220 (2d Dept. 2018).
Those decisions consistently rely upon the decision by the Court of Appeals in Pegasus Aviation
I v. Varig Logistica S.A., 26 N.Y.3d 543, 26 N.Y.S.3d 218 (2015), and the decision by the
Appellate Division, First Department, in VOOM HD Holdings LLC v. Echostar Satellite, L.L.C.,
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93 A.D.3d 33, 939 N.Y.S.2d 321 (1 st Dept. 2012), when considering the common-law doctrine of
spoliation and the doctrine’s corollary principles. For example, one of those corollary principles
holds that, “[w]here the evidence is determined to have been intentionally or willfully destroyed,
the relevancy of the destroyed documentation is presumed…On the other hand, if the evidence is
determined to have been negligently destroyed, the party seeking spoliation sanctions must
establish that the destroyed documents were relevant to the party’s claim or defense…” Pegasus
Aviation I, supra, 26 N.Y.3d at 547, 26 N.Y.S.3d at 602.
In Pegasus Aviation I, plaintiff commenced an action in Florida state court in February
2008 against defendant VarigLog for, among other things, breach of lease agreements for cargo
planes. The Florida action was voluntarily discontinued and in October 2008 plaintiff commenced
an action in New York against defendant VarigLog and its owner, defendant MP, for breach of
contract and conversion. Plaintiff sought discovery of electronically stored information (ESI) from
the defendants. In response, defendant VarigLog explained that computer crashes that occurred in
February and March 2009 resulted in the loss of much of the ESI, and that data recovery efforts
had proven unsuccessful. 26 N.Y.3d at 548-550; 26 N.Y.S.3d at 219-221. Plaintiff moved for the
imposition of sanctions against defendants VarigLog and MP striking VarigLog’s answer and
imposing a trial adverse inference against MP for their failure to properly preserve electronic and
paper records relevant to the action and within their control and for failure to impose a “litigation
hold” to preserve the documents. The Supreme Court found that defendants’ failure to issue a
“litigation hold” amounted to gross negligence as a matter of law, such that the relevance of the
missing ESI was presumed. 26 N.Y. 3d at 550, 26 N.Y.S.3d at 221. The Supreme Court therefore
struck the answer of VarigLog and imposed a trial adverse inference sanction against the MP
defendants with regard to ESI and paper records relevant to the action. Id. A divided Appellate
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Division reversed and denied plaintiff’s motion for a trial adverse inference instruction. The
majority held that the failure to preserve the ESI or to impose a “litigation hold” did not amount
to gross negligence per se, that the facts of the case supported, at most, a finding of simple
negligence, and that because plaintiff failed to prove that the lost ESI would have supported its
claims, a trial adverse inference sanction could not stand. The Appellate Division granted leave
to appeal to the Court of Appeals. Id.
The Court of Appeals prefaced Part II of its decision in Pegasus Aviation I with the
following guiding principle on the spoliation of evidence:
Our state trial courts possess broad discretion to provide
proportionate relief to a party deprived of lost or destroyed evidence,
including the preclusion of proof favorable to the spoliator to restore
balance to the litigation, requiring the spoliator to pay costs to the
injured party associated with the development of replacement
evidence, or employing an adverse inference instruction at the trial
of the action (see Ortega v. City of New York, 9 N.Y.3d 69, 76, 845
N.Y.S.2d 773, 876 N.E.2d 1189 [2007] [citations omitted]; CPLR
3126 [if a trial court determines that a party has destroyed evidence
that “ought to have been disclosed ... the court may make such orders
with regard to the failure or refusal as are just”] ).
26 N.Y. 3d at 551, 26 N.Y.S.3d at 222. The Court then affirmed the finding by the Appellate
Division that the defendants’ conduct in failing to institute a litigation hold and failing to preserve
the ESI was not gross negligence but, at most, amounted to simple negligence. 26 N.Y. 3d at 553,
26 N.Y.S.3d at 223. The Court reasoned, in part, that “[h]owever, in this instance, the failure to
institute a litigation hold did not amount to gross negligence per se, as the trial court held. Rather,
a party’s failure to institute a litigation hold is but one factor that a trial court can consider in
making a determination as to the alleged spoliator’s culpable state of mind.” 26 N.Y. 3d at 553,
26 N.Y.S.3d at 223. The Court found that the Appellate Division erred to the extent that it
determined that the plaintiff had not attempted to make a showing of relevance of the spoliated
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evidence and it remitted the matter to the Supreme Court for a determination as to whether the
negligently destroyed ESI was relevant to the plaintiff’s claims and, if so, what sanction, if any,
was warranted. 26 N.Y. 3d at 554, 26 N.Y.S.3d at 224. Justice Stein, writing a dissenting opinion
in which Judge Rivera concurred, explained that “[h]owever, I part ways with the majority over
its determination that the MP defendants’ ‘culpable state of mind’ amounted to, at most simple
negligence. I would hold that defendants acted with gross negligence in failing to preserve the
ESI.” 26 N.Y. 3d at 555, 26 N.Y.S.3d at 225. Justice Stein reasoned, in part, that under the
authorities of VOOM HD Holdings LLC v. Echostar Satellite, L.L.C., 93 A.D.3d 33, 939 N.Y.S.2d
321 (1st Dept. 2012), and Zubulake v. UBS Warburg LLC, 220 F.R.D. 212 (S.D.N.Y. 2003), and
based upon his disagreement with the majorities’ analysis of the record evidence, he concluded
that the defendants were grossly negligent in failing to preserve the ESI. 26 N.Y. 3d at 559, 26
N.Y.S.3d at 228.
In VOOM HD Holdings LLC v. Echostar Satellite, L.L.C., 93 A.D.3d 33, 36, 939 N.Y.S.2d
321, 324 (1st Dept. 2012), the Appellate Division, First Department, succinctly stated that,
This case requires us to determine the scope of a party's duties in the
electronic discovery context, and the appropriate sanction for failure
to preserve electronically stored information (ESI). We hold that in
deciding these questions, the motion court properly invoked the
standard for preservation set forth in Zubulake v. UBS Warburg
LLC, 220 F.R.D. 212 [S.D.N.Y.2003]; Pension Comm. of the Univ.
of Montreal Pension Plan v. Banc of Am. Sec., LLC., 685 F.Supp.2d
456, 473 [S.D.N.Y.2010], which has been widely adopted by federal
and state courts. In Zubulake, the federal district court stated, “Once
a party reasonably anticipates litigation, it must suspend its routine
document retention/destruction policy and put in place a ‘litigation
hold’ to ensure the preservation of relevant
documents” (Zubulake, 220 F.R.D. at 218). The Zubulake standard
is harmonious with New York precedent in the traditional discovery
context, and provides litigants with sufficient certainty as to the
nature of their obligations in the electronic discovery context and
when those obligations are triggered.
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In VOOM HD, defendant EchoStar, a provider of direct broadcast satellite television
services, terminated an affiliation agreement under which it agreed to distribute Voom’s television
programming. Plaintiff Voom commenced suit the next day. EchoStar did not implement a
litigation hold until after Voom filed suit, and the hold that was implemented did not suspend
EchoStar’s automatic deletion of e-mails after 7 days. It was not until four months after the
commencement of the lawsuit, and nearly one year after EchoStar was on notice of anticipated
litigation with Voom, that EchoStar suspended the automatic deletion of relevant e-mails. 93
A.D.3d at 38-39, 939 N.Y.S.2d 321, 326. Some relevant e-mails were captured by happenstance
in connection with other litigation, and those e-mails led the motion court to conclude that relevant
documents had been destroyed by EchoStar. 93 A.D.3d at 40, 939 N.Y.S.2d at 327. The motion
court also concluded that EchoStar’s conduct, at a minimum, constituted gross negligence, that
Voom had demonstrated that the destroyed evidence was relevant to its claims, and that in any
event, relevance is
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FILED: SUFFOLK COUNTY CLERK 12/23/2022 02:50 PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 511 RECEIVED NYSCEF: 12/23/2022 Exhibit A FILED: SUFFOLK COUNTY CLERK 08/06/2019 12/23/2022 08:03 02:50 AM PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 322 511 RECEIVED NYSCEF: 08/06/2019 12/23/2022 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF SUFFOLK ------------------------------------------------------------------- x ALBERT PEREZ, individually and derivatively : MOTION SEQ #007 on behalf of TOTAL COMPUTER SOFTWARE, LLC, : : Plaintiff, : -against- : Index No.: 063193/2013 : VINCENT TEDESCO, TOTAL COMPUTER : Justice Assigned: SYSTEMS, LTD. d/b/a TOTAL COMPUTER : Hon. Jerry Garguilo GROUP, TOTAL COMPUTER GROUP, LLC, : TOTAL COMPUTERS, LTD. And JOHN DOE : DECISION AND CORPORATION, : ORDER OF DISCOVERY : REFEREE Defendants and : : TOTAL COMPUTER SOFTWARE, LLC, : : Nominal-Defendant. : ------------------------------------------------------------------- x TOTAL COMPUTER SOFTWARE, LLC, : : Third-Party Plaintiff, : : -against- : : ALBERT PEREZ, : : Third-Party Defendant. : ------------------------------------------------------------------- x By Order of the Honorable Jerry Garguilo J.S.C., dated March 18, 2016, the undersigned was appointed as Referee to supervise all remaining discovery issues in this case pursuant to CPLR § 3104. By Notice of Motion dated October 29, 2018 [Motion #007], Plaintiff requests an Order, pursuant to CPLR § 3126 and 22 NYCRR § 130-1.12, dismissing Defendant’s Answer and Third- Party Complaint or precluding Defendants from introducing any evidence with regard to outstanding discovery upon the grounds that Defendants have failed to comply with the directives of the Court regarding discovery, have spoliated financial records, emails and other ESI materials, 1 of 54 FILED: SUFFOLK COUNTY CLERK 08/06/2019 12/23/2022 08:03 02:50 AM PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 322 511 RECEIVED NYSCEF: 08/06/2019 12/23/2022 and have engaged in unlawful surveillance of Plaintiff’s privileged work product and attorney client communications. Motion #007 has been referred to the undersigned for determination. A conference call was held on March 18, 2019 with counsel for the respective parties regarding Plaintiff’s Motion #007. Subsequently, to facilitate a determination of the motion by focusing the parties’ respective arguments on the precise evidence claimed to have been spoliated and/or not disclosed by defendants, by Decision and Order dated March 27, 2019 [Doc. No. 279] Plaintiff was ordered to serve and file an inventory that separately identified every item he contends has been spoliated and/or not disclosed (without additional legal arguments in support thereof). The inventory was to contain, for each separately stated item: (1) citations to Plaintiff’s motion papers that support the claim that the item has been spoliated and/or not disclosed; (2) a statement explaining the relevancy of each item to the remaining issues to be tried that are specified in the Court’s Decision/Order After Framed Issue Hearing dated July 12, 2018 (Doc. No. 201) and are otherwise relevant to the remaining causes of action in the Second Amended Complaint and in the Third-Party Complaint and Answer; and (3) a statement whether each of the enumerated spoliation issues can be decided on the motion papers or whether any of the claims require a hearing. Defendants were ordered to respond to each item on Plaintiff’s inventory following the same format. The parties were also directed to serve and file memoranda not exceeding 15-pages in length addressing the following issues: Has Plaintiff waived any of the claims of spoliation and for sanctions raised in Motion #007 because those claims were not raised at or prior to the framed issue hearing, and has Plaintiff been prejudiced by the claimed spoliation of evidence? In this regard, it was noted that the Decision/Order After Framed Issue Hearing dated July 12, 2018 (Doc. No. 201) states that “the parties introduced evidence in support of other claims including the propriety of the distribution (from an accounting standpoint), the bona fides of the calculations 2 2 of 54 FILED: SUFFOLK COUNTY CLERK 08/06/2019 12/23/2022 08:03 02:50 AM PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 322 511 RECEIVED NYSCEF: 08/06/2019 12/23/2022 used to arrive at the distribution, alleged discrepancies in the bookkeeping and record-keeping concerning revenue and debt of the relevant entities, fiduciary and contract issues,” and also states that “the parties exhausted themselves with testimony and exhibits addressing the bona fides of the books, records, adjustments, as well as contractual ramifications stemming from the agreements signed by the relevant parties.” [at p.3 of 10 and at p.10 of 10]. During the conference call on March 18, 2019, Plaintiff’s counsel acknowledged that he did not raise the issue of spoliation of evidence at the framed issue hearing. The parties were also directed to address the necessity of Motion #007 and the relief requested by Plaintiff in view of the Plaintiff’s apparent ability to submit evidence at the framed issue hearing on the question of the propriety of the disbursement of the $8 million sale proceeds without objection that Plaintiff was hampered in doing so by the spoliation of evidence. Pursuant to CPLR 2219(a), the papers that have been considered in deciding referred Motion #007 are (references are to Document Numbers on the NYSCEF Document List for this electronically filed commercial action): Notice of Motion dated October 29, 2018 (Doc. No. 207); affirmation in support of motion by Timothy McEnaney, Esq., together with Exhibits A-M annexed thereto (Doc. Nos. 208-221 and 223); transmittal affirmation of Aaron E. Zerykier, Esq., in opposition to Plaintiff’s motion for spoliation and other sanctions, together with the affidavits and affirmation and Exhibits annexed thereto as Exhibits A-LL (Doc. Nos. 224-266); the reply affirmation by Timothy McEnaney, Esq., together with Exhibits A-D annexed thereto (Doc. Nos. 268-272); sur-reply affidavit of Michael Graziano (Doc. No. 273); sur-reply affidavit of Vincent Tedesco (Doc. No. 274); sur-reply affirmation of Aaron E. Zerykier, Esq. (Doc. No. 275); email of Timothy McEnaney, Esq., dated January 30, 2019 addressing sur-reply papers; email of Aaron E. Zerykier, Esq., dated January 30, 2019 responding to Mr. McEnaney’s email; Plaintiff’s 3 3 of 54 FILED: SUFFOLK COUNTY CLERK 08/06/2019 12/23/2022 08:03 02:50 AM PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 322 511 RECEIVED NYSCEF: 08/06/2019 12/23/2022 Memorandum of Law together with Exhibits A-S annexed thereto (Doc. Nos. 281-300); Plaintiff’s Inventory of Spoliated Evidence (Doc. No. 302); Defendants’ Response to Plaintiff’s Spoliation Inventory (Doc. No. 303); Defendants Memorandum of Law together with Exhibits 1-14 annexed thereto (Doc Nos. 304-318); email of Viktoriya Liberchuk, Esq., dated June 17, 2019, with attached page 331 of the Framed Issue Hearing transcript; emails of Timothy McEnaney, Esq., and Aaron Zerykier, Esq., both dated June 18, 2019, regarding email search protocol; email of Timothy McEnaney, Esq., dated June 18, 2019, responding to question about possession of unauthenticated email server; emails of Timothy McEnaney, Esq., dated July 10, 2019 regarding plaintiff’s Inventory Item #8 and regarding inspection of the email server; corrected plaintiff’s Exhibit I (Doc. No. 321); and email of Aaron Zerykier dated August 5, 2019 providing defendants’ additional comments on plaintiff’s spoliation Item #9 PRIOR PROCEEDINGS The nature and scope of the dispute between the parties and the general principles governing the resolution of discovery disputes, including the discovery of electronically stored information (ESI) and the discovery of emails, were addressed in the Decision and Order of Discovery Referee dated July 15, 2016 (Doc. No. 132) and will not be repeated herein except as otherwise related herein. This action was commenced by the filing of a summons and complaint on October 4, 2013 (Doc. No. 1). Process was served on October 10, 2013 (Doc. No. 2). On June 26, 2013, prior to the commencement of litigation, counsel for Perez sent a letter by certified mail to defendant Total Computer Software, LLC, attention defendant Vincent Tedesco, demanding a formal accounting of the financial transactions and affairs of Total Computer Software, LLC and of the distribution 4 4 of 54 FILED: SUFFOLK COUNTY CLERK 08/06/2019 12/23/2022 08:03 02:50 AM PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 322 511 RECEIVED NYSCEF: 08/06/2019 12/23/2022 of the proceeds of the sale to Tiburon which is the subject of this action. See, Exhibit E annexed to the McEnaney affidavit (Doc. No. 213). By Decision and Order of Discovery Referee dated September 13, 2016 (Doc. No. 160), additional rulings were made on the discovery of emails. By Stipulation and Order e-filed on October 17, 2016 (Doc. No. 167), the parties agreed on a protocol for the discovery of ESI pertaining to the “Old” Great Plains Data, the “New” Great Plains Data, and the ConnectWise Data. By Decision and Order of Discovery Referee dated November 30, 2016 (Doc. No. 168), the parties were directed to meet and confer and to provide a joint report to the Discovery Referee regarding plaintiff’s allegations that Total Parties spoliated electronic evidence by wiping data from the “Old” Great Plains, the “New” Great Plains, and the ConnectWise databases. By Decision and Order of Discovery Referee dated December 16, 2016 (Doc. No. 169), a protocol for the discovery of emails contained on the Group email server that was agreed to by the parties was “so ordered.” By Decision/Order After Framed Issue Hearing dated July 12, 2018 (Doc. No. 201), the Court (Hon. Jerry Garguilo, J.S.C.) determined where the $8 million that was paid to the Software entity (Total Computer Software, LLC) for the application (the asset) known as “Total Enforcement,” went. The Court noted in the Decision/Order that during the framed issue hearing, the “[p]arties addressed the ‘why it [the $8 million] shouldn’t have gone there’ question as well [at p. 2]”, and that “the parties introduced evidence in support of other claims including the propriety of the distribution (from an accounting standpoint), the bona fides of the calculations used to arrive at the distribution, alleged discrepancies in the bookkeeping and record-keeping concerning revenue and debt of the relevant entities, fiduciary and contract issues [at p.3].” The 5 5 of 54 FILED: SUFFOLK COUNTY CLERK 08/06/2019 12/23/2022 08:03 02:50 AM PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 322 511 RECEIVED NYSCEF: 08/06/2019 12/23/2022 Court also noted in the Decision/Order that there was an “extensive record” pertaining to the “propriety of the disbursement of the $8 million” and stated that the Court would, upon the consent of the parties, “render[] a determination as to all remaining allegations concerning the propriety of the disbursement of the $8 million and; whether or not the Plaintiff is entitled to more money than that alleged by the Defendants [at p.3].” The parties did not consent to the Court’s suggestion and the remaining issues will proceed to trial following the determination of Motion #007. The Decision/Order also identified the following specific issues for further proceedings: 1. Mr. Ross’s findings of a $5,800,000.00 loss [n.4 at p.6]; and 2. Plaintiff’s “claim that the books were cooked and/or doctored” [n.6 at p.8]. During the Framed Issue Hearing, the Asset Purchase Agreement was put into evidence and was referred to as the “written consent action of members of Total Computer Software, LLC. [at p.5].” As to that document, the Court found [at p.5]: that the unanimous consent document unambiguously established that Plaintiff ratified all actions taken by Tedesco as President of Software and authorized, confirmed, ratified and approved any other agreements, certificates, instruments, consents, promissory notes, notices, financing statements, waivers and other documents to which the Company was a party, and the transaction of actions and instructions contemplated by or incident to the foregoing. After making that finding, the Court rejected plaintiff’s suggestion “that he should be exempt from the consequences of signing the purported unanimous consent document because he was not provided with a full copy of the unanimous consent until after the litigation commenced and therefore could not have ratified the transactions at issue [at p.5].” The Court therefore found that “the Plaintiff had actual notice of all the transactions he now contests [at p.5].” To the extent that defendants are arguing in opposition to plaintiff’s motion that the discovery that plaintiff is seeking is not relevant to plaintiff’s remaining claims by reason of the 6 6 of 54 FILED: SUFFOLK COUNTY CLERK 08/06/2019 12/23/2022 08:03 02:50 AM PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 322 511 RECEIVED NYSCEF: 08/06/2019 12/23/2022 Court’s rulings in Decision/Order After Framed Issue Hearing dated July 12, 2018 (Doc. No. 201), i.e., that “the unanimous consent document unambiguously established that Plaintiff ratified all actions taken by Tedesco as President of Software,” that contention necessarily involves a determination of the scope and effect of the Court’s ruling and deference is given to the Trial Judge to determine that issue. PLAINTIFF’S SPOLIATION INVENTORY AND DEFENDANT’S RESPONSE Plaintiff has identified fourteen evidentiary items that he claims were spoliated and/or not disclosed by Defendants. Defendants have denied those allegations in their responses to each item. This Decision and Order is guided by the contentions of the parties in their respective inventories, which are set forth as a composite in Appendix A to this Decision and Order and are incorporated by reference herein [sections including citations to the record for evidence in support of the contentions, and some footnotes, have been omitted; all typographical errors are carried over from the Word files that the parties submitted at the request of the Discovery Referee]. PRINCIPLES OF LAW In Sanders v. 210 N. 12th Street, LLC, 171 A.D.3d 966, 98 N.Y.S.3d 118 (2d Dept. 2019), plaintiff allegedly was injured on January 26, 2016 when he slipped and fell on a patch of ice as he was exiting the defendant’s building. Prior to the commencement of the personal injury action, defendant provided plaintiff’s employer with a two-minute clip of video surveillance footage depicting the plaintiff’s accident. The personal injury action was subsequently commenced on June 22, 2016. Plaintiff moved, inter alia, pursuant to CPLR §3101(i) to compel defendant to produce all of the video surveillance footage taken on the date of the accident, or pursuant to CPLR 3126 to preclude the defendant from introducing evidence at trial of matters pertaining to any destroyed video surveillance footage or to direct that a negative inference charge be given against 7 7 of 54 FILED: SUFFOLK COUNTY CLERK 08/06/2019 12/23/2022 08:03 02:50 AM PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 322 511 RECEIVED NYSCEF: 08/06/2019 12/23/2022 the defendant at trial on the ground of spoliation of evidence. Defendant stated that the remaining video surveillance footage was automatically deleted 30 days after the accident. Plaintiff’s counsel produced an unsigned letter dated February 23, 2016 purportedly sent to the defendant requesting that the defendant preserve the video and surveillance films showing the location of the accident for 6 hours before and 2 hours after the accident for any lawsuit that may be commenced. Defendant’s attorney denied that the defendant received that letter. The Judicial Hearing Officer granted that branch of the plaintiff’s motion which was pursuant to CPLR §3126 to impose sanctions on the defendant to the extent of precluding the defendant from offering the video surveillance footage of the accident into evidence at trial and referred that branch of the plaintiff’s motion which was for an adverse inference charge to the Justice of the Supreme Court presiding at trial. The Appellate Division, Second Department, reversed the order and determined that those branches of plaintiff’s motion which were pursuant to CPLR §3126 to impose sanctions on the defendant for spoliation of evidence should have been denied. The Appellate Division’s summary of the doctrine of spoliation is controlling for purposes of deciding Perez’s motion for spoliation: “Under the common-law doctrine of spoliation, when a party negligently loses or intentionally destroys key evidence, the responsible party may be sanctioned under CPLR 3126” (Holland v W.M. Realty Mgt., Inc., 64 AD3d 627, 629 [2009]). “A party that seeks sanctions for spoliation of evidence must show that the party having control over the evidence possessed an obligation to preserve it at the time of its destruction, that the evidence was destroyed with a culpable state of mind, and that the destroyed evidence was relevant to the party's claim or defense such that the trier of fact could find that the evidence would support that claim or defense” (Pegasus Aviation I, Inc. v Varig Logistica S.A., 26 NY3d 543, 547 [2015] [internal quotation marks omitted]; see Tanner v Bethpage Union Free Sch. Dist., 161 AD3d 1210, 1211 [2018]; Aponte v Clove Lakes Health Care & Rehabilitation Ctr., Inc., 153 AD3d 593, 593-594 [2017]). In the absence of pending litigation or notice of a specific claim, a defendant should not be sanctioned for discarding items in good faith and pursuant to its normal business practices (see Tanner v Bethpage Union Free Sch. Dist., 161 AD3d 8 8 of 54 FILED: SUFFOLK COUNTY CLERK 08/06/2019 12/23/2022 08:03 02:50 AM PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 322 511 RECEIVED NYSCEF: 08/06/2019 12/23/2022 at 1211; Aponte v Clove Lakes Health Care & Rehabilitation Ctr., Inc., 153 AD3d at 594; Biniachvili v Yeshivat Shaare Torah, Inc., 120 AD3d 605, 606 [2014]; Lovell v United Skates of Am., Inc., 28 AD3d 721 [2006]). 171 A.D.3d at 968, 98 N.Y.S.3d at 120. After stating the applicable principles, the Appellate Division then found, in a discussion that is not pertinent to consideration of Perez’s motion, that plaintiff was not entitled to the presumption of receipt by defendant of the letter requesting the preservation of the video surveillance footage and, as a result, plaintiff did not establish that the defendant failed to preserve all of the surveillance video footage. 171 A.D.3d at 968-969; 98 N.Y.S.3d at 121. After the Appellate Division made that determination, the Court then stated that, In any event, the plaintiff did not demonstrate that the defendant's failure to preserve all of the video surveillance footage fatally compromised his ability to prove his claim (see Doviak v Finkelstein & Partners, LLP, 137 AD3d 843, 846-847 [2016]; cf. Jennings v Orange Regional Med. Ctr., 102 AD3d 654, 656 [2013]; Mendez v La Guacatala, Inc., 95 AD3d 1084, 1085 [2012]). 171 A.D.3d at 969; 98 N.Y.S.3d at 121. The Appellate Division, Second Department, has applied these same principles in other decisions that it has rendered concerning the imposition of sanctions for the spoliation of evidence. E.g., Squillacioti v. Independent Group Home Living Program, Inc., 167 A.D.3d 673, 674-6765, 90 N.Y.S.3d 51, 53-54 (2d Dept. 2018); Franco Belli Plumbing and Heating and Sons, Inc. v. Dimino, 164 A.D.3d 1309, 1313, 84 N.Y.S.3d 195, 199-200 (2d Dept. 2018); SM v. Plainedge Union Free School District, 162 A.D.3d 814, 817-819, 79 N.Y.S.3d 215, 219-220 (2d Dept. 2018). Those decisions consistently rely upon the decision by the Court of Appeals in Pegasus Aviation I v. Varig Logistica S.A., 26 N.Y.3d 543, 26 N.Y.S.3d 218 (2015), and the decision by the Appellate Division, First Department, in VOOM HD Holdings LLC v. Echostar Satellite, L.L.C., 9 9 of 54 FILED: SUFFOLK COUNTY CLERK 08/06/2019 12/23/2022 08:03 02:50 AM PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 322 511 RECEIVED NYSCEF: 08/06/2019 12/23/2022 93 A.D.3d 33, 939 N.Y.S.2d 321 (1 st Dept. 2012), when considering the common-law doctrine of spoliation and the doctrine’s corollary principles. For example, one of those corollary principles holds that, “[w]here the evidence is determined to have been intentionally or willfully destroyed, the relevancy of the destroyed documentation is presumed…On the other hand, if the evidence is determined to have been negligently destroyed, the party seeking spoliation sanctions must establish that the destroyed documents were relevant to the party’s claim or defense…” Pegasus Aviation I, supra, 26 N.Y.3d at 547, 26 N.Y.S.3d at 602. In Pegasus Aviation I, plaintiff commenced an action in Florida state court in February 2008 against defendant VarigLog for, among other things, breach of lease agreements for cargo planes. The Florida action was voluntarily discontinued and in October 2008 plaintiff commenced an action in New York against defendant VarigLog and its owner, defendant MP, for breach of contract and conversion. Plaintiff sought discovery of electronically stored information (ESI) from the defendants. In response, defendant VarigLog explained that computer crashes that occurred in February and March 2009 resulted in the loss of much of the ESI, and that data recovery efforts had proven unsuccessful. 26 N.Y.3d at 548-550; 26 N.Y.S.3d at 219-221. Plaintiff moved for the imposition of sanctions against defendants VarigLog and MP striking VarigLog’s answer and imposing a trial adverse inference against MP for their failure to properly preserve electronic and paper records relevant to the action and within their control and for failure to impose a “litigation hold” to preserve the documents. The Supreme Court found that defendants’ failure to issue a “litigation hold” amounted to gross negligence as a matter of law, such that the relevance of the missing ESI was presumed. 26 N.Y. 3d at 550, 26 N.Y.S.3d at 221. The Supreme Court therefore struck the answer of VarigLog and imposed a trial adverse inference sanction against the MP defendants with regard to ESI and paper records relevant to the action. Id. A divided Appellate 10 10 of 54 FILED: SUFFOLK COUNTY CLERK 08/06/2019 12/23/2022 08:03 02:50 AM PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 322 511 RECEIVED NYSCEF: 08/06/2019 12/23/2022 Division reversed and denied plaintiff’s motion for a trial adverse inference instruction. The majority held that the failure to preserve the ESI or to impose a “litigation hold” did not amount to gross negligence per se, that the facts of the case supported, at most, a finding of simple negligence, and that because plaintiff failed to prove that the lost ESI would have supported its claims, a trial adverse inference sanction could not stand. The Appellate Division granted leave to appeal to the Court of Appeals. Id. The Court of Appeals prefaced Part II of its decision in Pegasus Aviation I with the following guiding principle on the spoliation of evidence: Our state trial courts possess broad discretion to provide proportionate relief to a party deprived of lost or destroyed evidence, including the preclusion of proof favorable to the spoliator to restore balance to the litigation, requiring the spoliator to pay costs to the injured party associated with the development of replacement evidence, or employing an adverse inference instruction at the trial of the action (see Ortega v. City of New York, 9 N.Y.3d 69, 76, 845 N.Y.S.2d 773, 876 N.E.2d 1189 [2007] [citations omitted]; CPLR 3126 [if a trial court determines that a party has destroyed evidence that “ought to have been disclosed ... the court may make such orders with regard to the failure or refusal as are just”] ). 26 N.Y. 3d at 551, 26 N.Y.S.3d at 222. The Court then affirmed the finding by the Appellate Division that the defendants’ conduct in failing to institute a litigation hold and failing to preserve the ESI was not gross negligence but, at most, amounted to simple negligence. 26 N.Y. 3d at 553, 26 N.Y.S.3d at 223. The Court reasoned, in part, that “[h]owever, in this instance, the failure to institute a litigation hold did not amount to gross negligence per se, as the trial court held. Rather, a party’s failure to institute a litigation hold is but one factor that a trial court can consider in making a determination as to the alleged spoliator’s culpable state of mind.” 26 N.Y. 3d at 553, 26 N.Y.S.3d at 223. The Court found that the Appellate Division erred to the extent that it determined that the plaintiff had not attempted to make a showing of relevance of the spoliated 11 11 of 54 FILED: SUFFOLK COUNTY CLERK 08/06/2019 12/23/2022 08:03 02:50 AM PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 322 511 RECEIVED NYSCEF: 08/06/2019 12/23/2022 evidence and it remitted the matter to the Supreme Court for a determination as to whether the negligently destroyed ESI was relevant to the plaintiff’s claims and, if so, what sanction, if any, was warranted. 26 N.Y. 3d at 554, 26 N.Y.S.3d at 224. Justice Stein, writing a dissenting opinion in which Judge Rivera concurred, explained that “[h]owever, I part ways with the majority over its determination that the MP defendants’ ‘culpable state of mind’ amounted to, at most simple negligence. I would hold that defendants acted with gross negligence in failing to preserve the ESI.” 26 N.Y. 3d at 555, 26 N.Y.S.3d at 225. Justice Stein reasoned, in part, that under the authorities of VOOM HD Holdings LLC v. Echostar Satellite, L.L.C., 93 A.D.3d 33, 939 N.Y.S.2d 321 (1st Dept. 2012), and Zubulake v. UBS Warburg LLC, 220 F.R.D. 212 (S.D.N.Y. 2003), and based upon his disagreement with the majorities’ analysis of the record evidence, he concluded that the defendants were grossly negligent in failing to preserve the ESI. 26 N.Y. 3d at 559, 26 N.Y.S.3d at 228. In VOOM HD Holdings LLC v. Echostar Satellite, L.L.C., 93 A.D.3d 33, 36, 939 N.Y.S.2d 321, 324 (1st Dept. 2012), the Appellate Division, First Department, succinctly stated that, This case requires us to determine the scope of a party's duties in the electronic discovery context, and the appropriate sanction for failure to preserve electronically stored information (ESI). We hold that in deciding these questions, the motion court properly invoked the standard for preservation set forth in Zubulake v. UBS Warburg LLC, 220 F.R.D. 212 [S.D.N.Y.2003]; Pension Comm. of the Univ. of Montreal Pension Plan v. Banc of Am. Sec., LLC., 685 F.Supp.2d 456, 473 [S.D.N.Y.2010], which has been widely adopted by federal and state courts. In Zubulake, the federal district court stated, “Once a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a ‘litigation hold’ to ensure the preservation of relevant documents” (Zubulake, 220 F.R.D. at 218). The Zubulake standard is harmonious with New York precedent in the traditional discovery context, and provides litigants with sufficient certainty as to the nature of their obligations in the electronic discovery context and when those obligations are triggered. 12 12 of 54 FILED: SUFFOLK COUNTY CLERK 08/06/2019 12/23/2022 08:03 02:50 AM PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 322 511 RECEIVED NYSCEF: 08/06/2019 12/23/2022 In VOOM HD, defendant EchoStar, a provider of direct broadcast satellite television services, terminated an affiliation agreement under which it agreed to distribute Voom’s television programming. Plaintiff Voom commenced suit the next day. EchoStar did not implement a litigation hold until after Voom filed suit, and the hold that was implemented did not suspend EchoStar’s automatic deletion of e-mails after 7 days. It was not until four months after the commencement of the lawsuit, and nearly one year after EchoStar was on notice of anticipated litigation with Voom, that EchoStar suspended the automatic deletion of relevant e-mails. 93 A.D.3d at 38-39, 939 N.Y.S.2d 321, 326. Some relevant e-mails were captured by happenstance in connection with other litigation, and those e-mails led the motion court to conclude that relevant documents had been destroyed by EchoStar. 93 A.D.3d at 40, 939 N.Y.S.2d at 327. The motion court also concluded that EchoStar’s conduct, at a minimum, constituted gross negligence, that Voom had demonstrated that the destroyed evidence was relevant to its claims, and that in any event, relevance is