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Court of Appeals on Spoliation Issues

February 9, 2016
Disclosure

Pegasus Aviation I, Inc. v Varig Logistica S.A., ___ NY3d ___, ___ NYS3d ___, 2015 NY Slip Op 09187 [2015]

The Court of Appeals here endorsed the holding 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], concerning imposition of sanctions for spoliation of evidence. Imposition of a sanction for spoliation requires proof of three elements: (1) control over the evidence and an obligation to preserve it; (2) that the party destroyed or lost the evidence with a “culpable state of mind”; and (3) that the evidence was relevant to the claim or defense.  “Culpable state of mind” includes ordinary negligence. Relevance is established where the evidence is lost intentionally or willfully, so as to amount to gross negligence; but where the loss is merely negligent relevance must be shown by the proponent of sanctions. Gross negligence, such as to support a finding of relevance, may be shown by serious failings such as not issuing a written litigation hold to employees, failing to identify “key players” and ensure that their documents are preserved, or continuing to delete emails. The distinction between simple and gross negligence thus becomes highly important.

Here, the dispute centered primarily on just that distinction: whether the defendant Varig Logistica (“VarigLog”) had failed to preserve electronically stored information (“ESI”) due to ordinary negligence or gross negligence.

VarigLog had failed to preserve emails, had not instituted any sort of litigation “hold” to ensure that materials were preserved, did not even have a centralized storage system for emails but stored them on the computers of individual employees, and that such as it did have on a central system had been lost in a series of computer crashes. Supreme Court held that the failure to establish a litigation hold established gross negligence, struck VarigLog’s answer, and imposed a trial sanction of an adverse inference upon certain other defendants. The Appellate Division was divided on the issue, but the majority rejected the finding that the failure to establish a litigation hold amounted to gross negligence per se, and reviewing the facts found only simple negligence. The majority held that the plaintiff had failed to show that the missing information was relevant, and struck the trial adverse inference sanction. The majority also noted its view that the adverse inference charge was so strong as to amount to summary judgment.

The Court of Appeals held that the record supported the Appellate Division conclusion of simple negligence. Rejecting the idea that the failure to institute a litigation hold, or some other factor, would lead to a per se finding of gross negligence, the Court agreed with the Appellate Division majority that all of the facts led to a determination of simple negligence. It did not, however, agree with the Appellate Division as to the sanction. It found that the majority had ignored the plaintiff’s arguments as to relevance. The Court remitted the matter to Supreme Court for further findings as to relevance.

There was a two-judge dissent, which would have found gross negligence. The dissent noted that the Court’s opinion fails to define “gross negligence,” and would have adopted the standard of the failure to exercise even slight care.

Relief From Conditional Disclosure Sanctions

February 1, 2016
Disclosure

Lawrence v North Country Animal Control, 133 A.D.3d 932 [3rd Dept., 2015]

The question presented here is whether there is a path to relief from a conditional disclosure order where the direction to disclose is not objected to, but where the conditional penalty seems excessive. The answer from the Appellate Division is that there is no immediate avenue of relief. If the conditional order is not complied with, the penalty will become absolute, and the path to relief will be a motion to vacate the conditional order.

The plaintiffs here alleged that they had adopted a dog from the defendant animal shelter, that in doing so they relied on the defendants’ misrepresentations concerning the nature and history of the dog, that the dog had repeatedly attacked them, and that they had returned the dog to the defendants. The defendants had sent the dog to a rescue shelter in Pennsylvania. Plaintiffs wanted the dog produced for a behavioral examination, which would bear on the defendants’ knowledge of its vicious propensities. Supreme Court ordered the defendants to produce the dog, adding that if the dog were not produced, they would be precluded from offering evidence that they did not know that the dog was dangerous and vicious when they sold him to the plaintiffs, and any defense of lack of knowledge would be stricken from their answer. How the animal’s behavior, four years after the incidents complained of, would prove the what the defendants knew at the time, is not set forth in the opinion. Nevertheless, on appeal the defendants did not challenge the relevance of the examination, or challenge the direction to produce it. They limited their appeal to the severity of the conditional penalty.

Note the severity of the conditional sanction. The burden of proof on the issue of notice of vicious propensities at trial will be on the plaintiff. Striking any defense on this issue is tantamount to resolving the issue in the plaintiffs’ favor. In considering the appropriate penalty for what amounts to spoliation of evidence, the dispositive consideration is the extent to which the party demanding disclosure has been prejudiced. (Compare, Scordo v Costco Wholesale Corp., 77 AD3d 725 [2d Dept., 2010]; and Shayovich v 800 Ocean Parkway Apt. Corp., 77 AD3d 814 [2d Dept., 2010].) Can it really be said that the failure to produce the dog has prevented the plaintiffs from proving notice of vicious propensities? It certainly would seem that, should the defendants prove unable to retrieve the dog from the rescue shelter, they would have a legitimate argument that the sanctions in the conditional order are disproportionate to the prejudice caused.

The defendants’ appeal was limited to the sanctions in the conditional order. The Appellate Division held that the only avenue of redress will be a motion to vacate the order, supported by proof of a reasonable excuse for the failure to comply with the order and of a meritorious defense. Even if the excuse is insufficient, should the defendants be deprived of their opportunity to argue that the sanction is excessive? If the court below had determined that the failure to produce the dog was willful, and had decided to impose sanctions under CPLR 3126 absolutely instead of conditionally, the defendants would have been allowed to argue for a lesser sanction. Why should they lose that opportunity when the order imposing sanctions was conditional?

Referees to Supervise Disclosure – A Brief Window For Review

May 28, 2015
CPLR 3104, Disclosure
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Nasir v Tait,

___ AD3d ___,2015 NY Slip Op 04461 [2d Dept., 2015]

When disclosure is supervised by a referee (CPLR 3104), motions seeking review of the referee’s orders by the referring judge must be made “within five days after the order is made” (CPLR 3104 [d]). The referee here directed the plaintiff to provide authorizations for records of his treatment for diabetes, and the plaintiff moved for review of the order thirteen days after the date of the order. Supreme Court entertained the motion on its merits and modified the referee’s order.

The Appellate Division reversed. The five days in which to move runs from the making of the referee’s order, not the day it is entered, and the plaintiff offered no excuse for the failure to move timely. Supreme Court should not have entertained the motion on its merits.

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Disclosure Demands and the Law of the Case

April 3, 2015
Collateral Estoppel/Res Judicata, Disclosure

Ziolkowski v Han-Tek, Inc.,

___ AD3d ___, 2015 NY Slip Op 02578 [4th Dept., 2015]

This was a workplace injury case, and the defendant Zynergy Solutions had moved to compel disclosure of certain documents by the plaintiff’s accountant, asserting that they were relevant to the plaintiff’s lost-wages claim. The motion was denied. The accountant was then deposed, and the defendant Han-Tek served a subpoena for the same documents. Plaintiff moved to quash, on the basis that the first order constituted the law of the case. Supreme Court granted the motion to quash.

The Fourth Department reversed. The deposition provided further evidence, making the law of the case doctrine inapplicable. Note, also, the recent determination of the Court of Appeals in Matter of Kapon v Koch, that one seeking to avoid disclosure by a non-party must show that the material or testimony sought is “utterly irrelevant.”

Pre-Action Disclosure – The First Requirement is a Valid Cause of Action

March 4, 2015
CPLR 3102, Disclosure

Matter of Woodbridge Structured Funding, LLC v Pissed Consumer & PissedConsumer.com,

___ AD3d ___, 2015 NY Slip Op 01527

If nothing else, respondents here get the award for “party name of the week.”

It seems the respondents run a blog where consumers get to blow off steam about lousy customer service. Most of these complaints are posted anonymously and seem destined never to be read, accomplishing nothing for their authors while discomfiting the objects of their displeasure not a whit. In other words, they are a modern version of shouting into the wind.

The complaint at issue seems to fit that description. Petitioner runs a structured settlement business, apparently buying out structured settlements. The particular complaint, however, involved nothing more serious than the petitioner’s supposed failure to provide the anonymous customer with a $500 gas card, which the customer claimed had been promised in petitioner’s advertising.

You might think that the best way to deal with an angry customer like this, already reduced to posting anonymously on a site like this, would simply be to ignore him, perhaps watching with amused detachment as his complaint withers from lack of attention. Petitioner however, determined that the best way to assuage this angry customer was to sue him for defamation.

In order to do that, petitioner had to find the anonymous customer’s name; and in order to do that petitioner had to move for pre-action disclosure from the respondents, the owners of the blog. That motion, governed by CPLR 3102 (c), is where the matter finally becomes of interest to us.

Supreme Court dismissed the petition. Whereupon, of course, petitioner decided to take this appeal, ensuring that the complaint would finally get wider attention, and would be preserved in the Official Reports.

The motion for pre-action disclosure will lie where the petitioner can demonstrate the existence of a cause of action, but does not know the identity of the prospective defendant. Here, petitioner failed to demonstrate a meritorious claim, in that the anonymous customer’s statements were non-defamatory opinion. Moreover, petitioner failed to show that it had sustained any injury to its reputation. The proceeding was therefore properly dismissed by Supreme Court.

No Work-Product Privilege for an Interview With the Adversary

March 2, 2015
CPLR 3101, Disclosure

Geffner v Mercy Med. Ctr.,

___ AD3d ___, 2015 NY Slip Op 01411 [2nd Dept., 2015]

In this medical malpractice-wrongful death action, the plaintiff interviewed one of the defendants before commencing the action, and recorded the conversation. The plaintiff is apparently an attorney, and appeared pro se in the the Appellate Division, leading to the inference that she is pro se in the action.

Defendants demanded a copy of the recording, to which the plaintiff objected. Supreme Court directed her to provide the copy or be precluded from using it at trial. On appeal, the Appellate Division held that the recording was not entitled to the absolute work product privilege merely because plaintiff made it in her capacity as an attorney. She did not show that failed to show that “the recording contained elements of opinion, analysis, theory, or strategy.” Similarly, there was no showing that it was trial preparation material, to which a conditional privilege applies. The order was therefore affirmed.

The opinion makes no mention of CPLR 3101 (e), which would seem to be the controlling paragraph. The paragraph is simple, direct and unequivocal: “A party may obtain a copy of his own statement.” In Briggs v. Spencerport Road Plaza, Inc., 19 A.D.2d 943, [4th Dept., 1963], the court observed that its purpose was to allow a party access to his own statements without having to prove special circumstances. Read More

Physical Examination – Exchange of Medical Reports

February 5, 2015
22 NYCRR 202.17, CPLR 3121, Disclosure

Hamilton v Miller,

23 N.Y.3d 592, 992 N.Y.S.2d 190 [2014]

Disclosure rules in the CPLR and the Uniform Rules for the Trial Courts require disclosure of medical reports accompanying defense physical examinations. (CPLR 3121, 22 NYCRR 202.17) Plaintiffs sometimes balk at the production of reports, claiming that they have not yet retained physicians to testify at trial, and therefore have no reports to produce. Defendants, of course, respond that they cannot reasonably be required to retain examining physicians if they don’t know what they are supposed to look for. The Court of Appeals here considered this problem.

At first blush, the decision favors the plaintiffs’ argument. Closer examination shows that the Court’s interpretation of the rules still places a substantial burden on plaintiffs. The limits of this burden remain to be worked out.

Before the Court were two lead-paint-poisoning cases, and the question in each was whether the plaintiffs could be compelled to produce medical reports detailing each injury claimed by the plaintiffs and causally relating them to exposure to lead-based paint. The Court of Appeals held that it was an abuse of discretion to compel the plaintiff to produce such reports.

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Non-Party Depositions: Counsel for the Witness Now Has A Place At the Table

February 4, 2015
CPLR 3113, Depositions, Disclosure

When a non-party witness is deposed, is there any place in the deposition room for the witness’ counsel? In two cases, Thompson v Mather, and Sciara v Surgical Assoc., the Fourth Department took a hard line against any participation by counsel for the witness. The court read CPLR 3113 as denying counsel any right to participate in any way, and as most definitely denying counsel any right to object on any ground, whether based on privilege or otherwise.

Effective September 23, 2014, CPLR 3113 (c) has now been amended so as to overrule this line of cases. A new sentence has been added, allowing counsel for a non-party deponent to participate in the deposition and make objections on behalf of the deponent in the same manner as counsel for a party. Read More

Disclosure of a Fellow-Patient’s Identity

February 2, 2015
CPLR 4504, Disclosure

Kneisel v QPH, Inc.,

___ AD3d ___, ___ NYS2d ___, 2015 NY Slip Op 00503 [2nd Dept., 2015]
The issue here was whether medical privilege blocked the disclosure of the name and address of the plaintiff’s decedent’s fellow patient, who might have witnessed the acts of malpractice and negligence alleged against the defendant hospital.
As a general matter, if disclosure of their names and addresses of fellow patients will not carry with it any information which would also disclose their diagnosis and treatment, the privilege is not violated. So, in Rabinowitz v St. John’s Episcopal Hosp., 24 AD3d 530, the alleged negligence occurred in an emergency room. Plaintiff’s decedent fell from a gurney, leading to his death. Plaintiff sought disclosure of the names and addresses of patients in the treatment area, so as to ascertain whether there were any witnesses to the fall. The court held that disclosure of the names and addresses of non-party patients who may have been eyewitnesses does not violate the doctor-patient privileges of the non-party patients, provided that the demanding party does not seek to identify patients by the treatment they received and provided that the location in the hospital does not itself reveal the non–party’s medical status. Since an emergency room provides a broad range of services, disclosure in Rabinowitz did not violate the privilege.
In Kneisel, by contrast, both the plaintiff’s decedent and the fellow-patient were residents of Holliswood Hospital, in a unit for children from 12 to 15 years of age suffering from specific psychiatric disorders. Disclosure of the roommate’s presence in that unit would necessarily have revealed her medical status, and so disclosure was prohibited by the medical privilege.

Out-of-State Deposition Witnesses; Video Depositions

January 30, 2015
CPLR 3113, Disclosure

Mohel v Gavriel Plaza, Inc.,

___ AD3d ___, ___ NYS2d ___, 2014 NY Slip Op 08508 [1st Dept., 2014]
This terse decision prompts a review of the rules governing the deposition site of out-of-state parties, as well as of depositions by video conference. The nature of the action is not stated, but the defendant Highland was a Limited Liability Company with one member, a resident of Israel. The Appellate Division affirmed Supreme Court’s order conditionally striking Highland’s answer unless it produced that member for deposition in New York. The court observed that the plaintiff did not have to consent to the member’s deposition by video conference. (See, CPLR 3113 [d])
The general rule is that absent a showing of hardship, a party to an action in our courts must be deposed in New York, and must bear its own expenses in coming here. Compare Criscenti v Verizon, 72 A.D.3d 464, where a corporate party showed no hardship and had to come to New York for deposition; with Gartner v Unified Windows, Doors & Siding, Inc., 68 A.D.3d 815, where a decedent’s next of kin lived in Colombia and could not come to New York without hardship. Alternatives to a New York deposition were allowed and listed.
Two recent cases illustrate the point.  Read More