The opinion of the court was delivered by: Leslie G. Foschio United States Magistrate Judge
This case was referred to the undersigned for all pretrial matters by Hon. William M. Skretny on September 18, 2008 (Doc. No. 17). The matter is presently before the court on Defendant Campbell Soup Company's ("Campbell") motion to compel Plaintiff Steuben Foods, Inc. ("Steuben" or "Plaintiff") to produce documents responsive to Defendant Campbell's document requests and for sanctions based on Plaintiff's alleged spoliation filed April 9, 2010 (Doc. No. 140) ("Campbell's motion").
At oral argument conducted on Campbell's motion on May 20, 2010, the court resolved Campbell's document requests which were the subject of Campbell's motion on the record and reserved decision on Campbell's request for sanctions based on spoliation. (Doc. No. 177).
Plaintiff has alleged that Defendant Country Gourmet ("Country Gourmet") breached an exclusive supply contract with Plaintiff ("the Processing Agreement") when Country Gourmet sold its assets, excluding the Processing Agreement as a Country Gourmet asset, to Defendant Campbell and that Campbell was guilty of intentional interference with contract and is equally liable for Country Gourmet's breach of the Processing Agreement under theories of successor liability or fraudulent transfer.
Campbell's basis for the instant motion is that Plaintiff failed to institute a written litigation hold directing all Plaintiff employees not to destroy electronically stored information ("ESI") pertaining to the instant litigation, and related document preservation procedures at the earliest time when it became aware of the likelihood of future litigation against Country Gourmet and Campbell. Memorandum of Points and Authorities in Support of Defendant Campbell Soup Company's Motion to Compel Disclosure and For Other Relief (Doc. No. 141) ("Campbell's Memorandum) at 10-11. As a result, according to Campbell, relevant documents were not produced by Plaintiff and should be presumed lost thereby warranting sanctions based on spoliation of evidence against Plaintiff. Campbell's Reply Memorandum (Doc. No. 165) at 1 ("Additional documents and emails may have been destroyed."); Supplemental Briefing in Support of Defendant Campbell Soup Company's Motion for Sanctions Based on Steuben's Spoliation of Documents (Doc. No. 179) ("Campbell's Supplemental Brief") at 8 ("rebuttable presumption that . . . additional unknown documents were destroyed").
Campbell points to the Declaration of Thomas M. Krol ("Krol"), then Plaintiff's corporate counsel, dated and filed May 10, 2010 (Doc. No. 156) ("Krol Declaration"), as demonstrating that the litigation hold implemented by Plaintiff was accomplished orally through conversations between Krol and senior management officers of Plaintiff, particularly Kenneth Schlossberg, President ("Schlossberg"), and Jeffrey Sokal, Vice President of Business Development ("Sokal"), as well as six other managers and officers of Plaintiff. Krol Declaration ¶¶ 23-24. According to Krol, each of these managers was personally directed by him to identify all ESI including paper documents and email communications pertaining to Country Gourmet or Campbell, and not to discard or delete or otherwise destroy such documents pending the instant litigation which was instituted by Plaintiff on July 31, 2008. Id. ¶¶ 26-27.
Campbell relies primarily on three emails, dated June 24, 2008 ("June 24, 2008 email"), May 28, 2008 ("May 28, 2008 email") and June 17, 2008 ("June 17, 2008 email"), the first two sent by Plaintiff to Campbell with copies to Country Gourmet that were received by Campbell from Plaintiff, but not produced by Plaintiff, as supporting Campbell's contention that as a result of Krol's delayed and unwritten litigation hold, and other alleged document preservation failures on the part of Plaintiff, documents relevant to Campbell's defense were lost. Jordan D. Weiss Declaration (Doc. No. 142) Exh. N.
With regard to the June 24, 2008 email, Campbell contends that Plaintiff alleges that during a June 23, 2008 face-to-face meeting between Schlossberg and Mr. Patrick Ozimek ("Ozimek"), Campbell's director of North American contract manufacturing, Campbell threatened Plaintiff that unless Plaintiff agreed to modifications of the Processing Agreement acceptable to Campbell, the Processing Agreement would be excluded from Campbell's prospective acquisition of Country Gourmet's assets, thereby effectively ending Plaintiff's production activities for Country Gourmet and, as well, eliminating any opportunity for Plaintiff to benefit from Campbell's takeover of Country Gourmet's business assets through expanded marketing of Country Gourmet's products that had been produced by Plaintiff. Because the June 24, 2008 email describes the meeting as "good, open and frank," such language, according to Campbell, negates Plaintiff's allegation that Campbell engaged in threatening conduct at the meeting. Based on Plaintiff's failure to produce the June 24, 2008 email, Campbell asserts that the court should find that the email was not preserved and "allowed to disappear" for lack of a timely written litigation hold by Plaintiff because the email provided exculpatory evidence contradictory to a key allegation in Plaintiff's complaint. Campbell's Memorandum at 12.
Campbell also points to another email from Sokal to Michael McGrath, Country Gourmet's president and CEO ("McGrath") on May 28, 2008, confirming a telephone conference call between McGrath and Sokal, and advising McGrath that Schlossberg desired to participate in the call. According to Campbell, this document was produced by Country Gourmet but not produced by Plaintiff thus providing a ground upon which to infer that as a result of Krol's tardy and unwritten litigation hold, relevant documents in Plaintiff's possession were likely, or should be presumed to have been, lost or destroyed. Supplemental Briefing in Support of Defendant Campbell Soup Company's Motion for Sanctions Based on Steuben's Spoliation of Documents (Doc. No. 179) ("Campbell's Supplemental Briefing") at 7; Supplemental Declaration of Jordan D. Weiss, Esq. (Doc. No. 180, Exh. C). Finally, Campbell points to a copy of an internal email from Sokal to Ms. Cassandra Brannick, Schlossberg's assistant ("Brannick"), dated June 17, 2008 referring to Ozimek as originally being from the Buffalo, New York area, indicating that Ozimek's parents still reside in the area, and that it was "just a matter of time before he [Ozimek] called," along with a related message from Brannick advising Sokal that Brannick had scheduled a phone call for Schlossberg and McGrath for June 18, 2008. Exh. B to Weiss Reply Declaration (Doc. No. 166); Campbell Reply Memorandum (Doc. No. 165) at 5-6.
Spoliation is "the destruction or the significant alteration of evidence, or the failure to preserve property for another's use as evidence in pending or reasonably foreseeable litigation." West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 789 (2d Cir. 1999) (quoting BLACK'S LAW DICTIONARY, 1401 (6th ed. 1990)). "A party bringing a spoliation motion must demonstrate that: (1) the party charged with destroying the evidence had an obligation to preserve it; (2) the records were destroyed with a 'culpable state of mind'; and (3) the destroyed evidence was relevant to the party's claim or defense." Piccone v. Town of Webster, 2010 WL 3516581, at *5 (W.D.N.Y. Sep't. 3, 2010) (absent a showing that destroyed emails constituted relevant evidence spoliation sanctions not imposed (quoting Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 107 (2d Cir. 2002) (citing Byrnie v. Town of Cromwell, Bd. of Educ., 243 F.3d 93, 107-12 (2d Cir. 2001)))). A litigant's duty to preserve relevant evidence arises when litigation is reasonably anticipated and no later than the time when the complaint is served. Fujitsu Ltd. v. Federal Exp. Corp., 247 F.3d 423, 436 (2d Cir.), cert. denied, 534 U.S. 891 (2001); Pension Committee of the University of Montreal Pension Plan v. Banc of America Securities, LLC, 685 F.Supp.2d 456, 466 (S.D.N.Y. 2010) ("Pension Committee"); Turner v. Hudson Transit Lines, Inc., 142 F.R.D. 68, 73 (S.D.N.Y. 1991).
Courts have found that actual destruction or loss of relevant documents is a prerequisite for sanctions based on spoliation. See Crown Castle USA, Inc. v. Nudd Corporation, 2010 WL 1286366, at *12-13 (W.D.N.Y. Mar. 31, 2010) (destruction of electronic documents and emails involving key employee pursuant to plaintiff's document retention policy and not available in electronic backup form because of a party's failure to implement a timely litigation hold notice to such employee supported imposing costs of redeposition of witness to attempt to reconstruct lost information); Passlogix, Inc. v. 2FA Technology, LLC., 708 F.Supp.2d 378, 417 (S.D.N.Y. 2010) (finding defendant's deletion of at least 12 emails and 91 text messages constituted culpable spoliation of relevant evidence warranting fine); Scalera v. Electrograph Systems, Inc., 262 F.R.D. 162, 178 (E.D.N.Y. 2009) (concluding that defendant's preservation failures resulted in loss of "some electronic data," however, denying plaintiff's spoliation motion for failure to establish that lost email records "would have been favorable to plaintiff"); Chan v. Triple 8 Palace, Inc., 2005 WL 1925579, at *5 (Aug. 11, 2005 S.D.N.Y.) (granting sanctions upon finding in a Fair Labor Standards Act action based on defendant's admitted destruction of money receipt book and tip distribution sheets as relevant evidence); Thiele v. Oddy's Auto and Marine, Inc. v. Fountain Power Boats, Inc., 906 F.Supp.158, 162 (W.D.N.Y. 1995) (granting, in part, spoliation motion based on destruction of boat prior to co-defendant's opportunity to inspect). "'[F]or sanctions to be appropriate, it is a necessary, but insufficient, condition that the sought-after evidence actually existed and was destroyed,'" Orbit One Communications, Inc. v. Numerex Corp., 271 F.R.D. 429, 441 (S.D.N.Y. 2010) (quoting Farella v. City of New York, 2007 WL 193867, at *2 (S.D.N.Y. Jan. 27, 2007) (emphasis in original))). Compare Fujitsu Limited, 247 F.3d at 436 (denying spoliation motion based on defendant's failure to demonstrate that plaintiff's destruction of relevant container and contents constituted "an intentional attempt to destroy evidence"); Orbit One Communications, Inc. v. Numerex Corp., 271 F.R.D. 429, 442-43 (S.D.N.Y. 2010) (finding no evidence of actual loss of emails and other electronically stored documents as a result of plaintiff's faulty preservation actions); Piccone, 2010 WL 3516581, at *7 (emails, without relevance to issues, destroyed after duty to ...