Appellate Court affimrs state Supreme Court's sanctions against EchoStar
Well, last week the Appellate Court affirmed the sanctions (spoliation) against EchoStar. I think we'll see a settlement in the near future on this issue...probably in the tune of 700M+. Anyway, I've attached the ruling (you can read through the entire 26-pages if you wish) and highlighted a few items that I though were most relevant:
"During October 2007, EchoStar conducted an audit of Voom's 2006 investment in the service. On October 26, 2007 EchoStar's own audit concluded, in an email sent to Crawford, that "Everything at VOOM looks fine...these guys are clean...very organized, forthcoming, and from an accounting perspective run a good shop."
"On January 30, 2008, EchoStar formally "terminated the Agreement effective February 1, 2008." Voom commenced this action the next day. EchoStar did not implement a litigation hold until after Voom filed suit. Yet this purported "hold" did not suspect EchoStar's automatic deletion of e-mails. Thus, any e-mails sent and any e-mails deleted by an employee were automatically and permanently purged after seven days. It was not until June 1, 2008 - four months after the commencement of the lawsuit, and nearly one year after EchoStar was on notice of anticipated litigation - that EchoStar suspected the automatic deletion of relevant e-mails."
"We agree with the motion court that an adverse inference was warranted because EchoStar's spoliation of electronic evidence was the result of gross negligence at the very least, and now affirm."
"In any event, the record shows that the destroyed evidence was relevant. The "snapshot" e-mails reviewed by the motion court "demonstrated EchoStar's intention to declare various breaches by Voom" as an excuse for terminating the agreement. These e-mails - a handful only fortuitously recovered, and highly relevant - certainly permitted the inference that the unrecoverable e-mails, of which the snapshots were but a representative sampling, would have also be relevant." Moreover, the missing evidence prejudiced VOOM...EchoStar's internal communications undoubedly concerned issues about what it understood the contract to mean, a contract that the motion court has now found to be ambiguous."
"In sum, the motion court's spoliation sanction was appropriate and proportionate."
"To the extent that EchoStar was actually negotiating in good faith, which the evidence suggest is doubtful, that does not vitiate the duty to preserve evidence."
"Accordingly, the motion court properly determined that EchoStar should have reasonably anticipated litigation as early as June 2007 and certainily no later than February 1, 2008, the date the complaint was filed; that EchoStar was grossly negligent in failing to implement a litigation hold until after litigation had already commended; that EchoStar did not implement an appropriate litigation hold until June 2008, approximately four months after litigation had commenced; that such failures entitled the finder of fact to presume the relevancy of the destroyed electronic data; and that an adverse inference charge was an apppropriate spoliation sanction in light of the above."
"We have considered EchoStar's remaining contentions and find them unavailing."
"Accordingly, the order of the Supreme Court, New York County, entered November 9, 2010, which, insofar as appealed from, granted plaintiff's motion to impose sanctions againt defendant from the spoliation of evidence and to bar defendant from calling nonparty Avram Tucker as an expert witness at trial and from introducing his expert report, should be affirmed, with costs."
