A leading appellate court in New York has now adopted the stringent rules applied in federal courts prescribing an early date by when documents and information must be preserved and imposing the tough sanction of adverse inference for failure to do so. New York Southern District Judge Shira Scheindlin in the seminal case Zubulake v. UBS Warburg LLC, 220 F.R.D. 212 (S.D.N.Y. 2003), held that “[o]nce 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.” 220 F.R.D. at 218. Although the New York Appellate Division, First Department had previously adopted the Zubulake standard when reviewing a motion for sanctions involving the destruction of electronic evidence, Voom HD Holdings LLC v. EchoStar Satellite LLC, Index No. 600292/08, 2012 NY Slip Op 00658 (January 31, 2012), marks the first New York State appellate court decision to apply the Zubulake standard as it pertains to e-mail preservation and litigation holds. While litigation hold requirements have existed for decades, this is the first instance where a state court has gone the way of the federal courts and sanctioned a party for improper conduct in this regard.

In EchoStar, a unanimous First Department panel found that EchoStar Satellite LLC, the owner of the DISH Network satellite broadcasting company, failed in its duty to preserve relevant emails leading up to a contract dispute with Voom HD Holdings LLC, a subsidiary of Cablevision. In adopting Zubulake, the First Department held that it “provides litigants with sufficient certainty as to the nature of their obligations in the electronic discovery context and when those obligations are triggered.” The First Department found that the trial court “properly invoked the [Zubulake] standard for preservation” and affirmed the imposition of sanctions for spoliation.

Please see full alert below for more information.