Opening Pandora’s Box: A Preliminary Showing of Spoliation May Result in the Compelled Production of a Litigation Hold Notice

In Radiation Oncology Servs. of Cent. N.Y., P.C. v. Our Lady of Lourdes Mem’l Hosp., Inc., the New York Supreme Court reminded litigants that while litigation holds are generally protected by the attorney-client privilege or under the attorney work product doctrine, a preliminary showing of spoliation of evidence may compel the production of an offending party’s litigation hold documentation. In this litigation involving clinical privileges related to an exclusive radiation oncology services agreement, the plaintiffs identified seven specific instances of spoliation by the defendants. These included certain emails that the defendants produced in hard copy form, but for which they were unable to produce the corresponding electronic version and the related metadata – which the court seemed to globally refer to as the “electronically stored information,” or ESI, relating to the emails – because they had been deleted.

The plaintiffs successfully argued that the failure to produce the ESI constituted spoliation because it deprived them of the ability to understand whether there were follow-up discussions with other individuals about the content of the communications, including those who may have been copied on the communications or follow-up emails. The court granted the plaintiffs’ motion to compel the production of the defendants’ litigation hold notice because it found that the permanent deletion of the ESI “potentially deprived the emails of significant evidentiary value.” Addressing production of the litigation hold notice, the court noted that “[p]roduction of a litigation hold may be ordered upon a preliminary showing of spoliation because its scope and effect bear directly on the state of mind of the party with control of the destroyed evidence, which is a critical element in determining whether spoliation sanctions are warranted, and, if so, in assessing an appropriate sanction.”

However, the court was careful to also note that the production of the litigation hold notice would not be proper in the event the defendants were able to demonstrate: (1) that they had no obligation to preserve the evidence at the time of its destruction; (2) the evidence was destroyed through no fault or wrongdoing whatsoever, even negligence; or (3) the missing evidence was not relevant to the plaintiffs’ claims. Here, the defendants conceded that a litigation hold was in place at the time the emails were deleted, and that the emails were relevant to the plaintiffs’ claim (even if only presumptively so based on an intentional act of spoliation). Moreover, the court explained that one of the defendants’ employees acknowledged deleting one of the critical emails immediately after receipt. As such, the court found that the plaintiffs had made a preliminary showing of spoliation sufficient to compel production of the defendants’ litigation hold, which was necessary to provide the parties a full and fair opportunity to litigate the issue of spoliation sanctions.

The need to preserve ESI cannot be overstated, particularly when a party has been put on notice of its obligation to preserve such evidence. Whether a party intentionally or negligently destroys ESI, the potential consequence of such conduct is having to produce privileged information, particularly a litigation hold notice, which opens the door to costly and burdensome “discovery on discovery.” This decision serves as an important reminder to ensure that: (1) litigation hold notices are timely issued; (2) custodians confirm receipt of the holds; and (3) custodians understand the importance of compliance with a litigation hold. Not only does discovery on the discovery process have the potential to significantly escalate the cost of a litigation, but it also can completely steer a litigation away from consideration of its merits.

Additionally, and significantly, this decision again points to the unique nature of litigation holds and other preservation-related documents. As this court explained, these materials are generally protectable attorney-client communications and attorney work product and should be treated as such. However, it must be understood that in most jurisdictions, sufficient preliminary evidence of spoliation or other discovery misconduct may well give rise to court orders to disclose these documents, or, in some cases, a party’s decision to voluntarily produce them to defend against claims of misconduct. As such, attorneys should take caution to avoid including information in the hold notice that might ultimately prejudice their client’s position if the document is disclosed, including comments regarding litigation strategy, the merits of the claim, and confidential material that is not otherwise essential to the purpose of the hold notice.