When siblings are goofing off and one of them throws something and breaks a window, mom or dad will come in from another room and, after it's determined who did what, “But I didn’t mean to!” is a likely retort by the guilty party. The window is still broken, and damage is done, despite there being no intent to break the window. The window still needs to be fixed, and someone will have to pay for it.

Similar circumstances arose in Kosher Ski Tours Inc. (KST) v. Okemo Limited Liability Co., where the court sanctioned the defendant for failing to preserve evidence even without any showing of intent to deprive. In this case, KST had sent Vail Resorts Inc. a demand letter on October 7, 2020 stating that, “We intend to file an action against Okemo no later than October 16, 2020 if Okemo does not immediately honor the Lodging Agreement and compensate KST for the losses it has already incurred.” This letter was sent after Okemo had notified KST on September 18, 2020 that it could not accommodate an upcoming reservation due to issues stemming from COVID-19. On October 19, 2020, KST filed suit for breach of contract in NY State Supreme Court and the case was ultimately removed to federal court. Okemo was first aware of the suit against it on or about October 23, 2020. A week later, it placed a legal hold on employees reasonably believed to have information related to the alleged breach of contract. After investigation, Okemo learned that two additional employees may have had relevant information and added them to the legal hold on January 20, 2021, which was 93 days after suit was filed. According to Okemo's document retention policy, ESI was auto-deleted after 90 days.

KST subsequently filed a motion in limine for sanctions due to spoliation under Rule 37(e).

Rule 37(e) states that if electronically stored information that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery, the court:

(1) upon finding prejudice to another party from loss of the information, may order measures no greater than necessary to cure the prejudice; or

(2) only upon finding that the party acted with the intent to deprive another party of the information’s use in the litigation may:

(A) presume that the lost information was unfavorable to the party;

(B) instruct the jury that it may or must presume the information was unfavorable to the party; or

(C) dismiss the action or enter a default judgment.

In this case, the court granted the motion under Rule 37(e)(1), not 37(e)(2). The standard for a party seeking sanctions under Rule 37(e)(2) is to show by clear and convincing evidence that the alleged party acted with intent to deprive the movant of the information for use in litigation. Sanctions were handed down by the court even though KST was not able to show intent. The sanctions given by the court were (1) to allow the parties to present evidence to the jury about the loss of the ESI and its relevance and (2) to instruct the jury that it may consider that evidence in its decision. For more information on the case, check out the Exterro Case Law Alert, featuring commentary from Reed Smith’s Patricia Antezana.