N.Y. Appeals Court Rejects Dish Networks’ Challenge to Lower Court Sanctions
A New York State appeals court rejected Dish Networks’ challenge to sanctions a lower court imposed on Dish for allegedly destroying evidence tied to Cablevision’s $2.5 billion suit against it. The New York State Supreme Court’s Appellate Division upheld Judge Richard Lowe’s ruling that he could tell jurors about erased emails in an upcoming trial into Cablevision’s claims that it breached a contract to carry the defunct Voom network. Jurors could assume the email evidence would benefit Cablevision, Lowe said. Cablevision sued EchoStar in 2008, but Dish assumed related litigation when EchoStar was spun off as a separate hardware company.
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While the law requires employees to preserve “all relevant records, electronic or otherwise” related to potential suits, Dish didn’t issue a “litigation hold” until after Cablevision filed suit, the appeals court said. A “snap shot of relevant email” wasn’t taken until four days after the suit began and automatic destruction of emails didn’t stop until four months later, the court said.
"It is well settled that a party must suspend its automatic deletion function or otherwise preserve emails as part of a litigation hold,” the court stated. The appeals court sided with Lowe, finding that “adverse inference” during the trial would be “warranted because Dish spoliation of electronic evidence was the result of gross negligence at the very least.” A Dish Network spokesman declined to comment.
Dish argued that the standard requiring a litigation hold “is vague and unworkable” because it doesn’t provide guidelines for what “reasonably anticipating” litigation means. Lowe had ruled that Dish should have started preserving records in June 2007, around the time that the satellite service began weighing ending its agreement with Voom. Without pending litigation or notice of a specific claim, Dish maintained it shouldn’t be sanctioned “for discarding items in good faith and pursuant to normal” business practices.
Dish’s “approach would encourage parties who actually anticipated litigation, but who do not yet have a ’specific claim,’ to destroy their documents with impunity,” the appeals court wrote.
Voom and EchoStar signed a 15-year distribution agreement in November 2005, making Voom’s channels available through HD programming services. EchoStar could terminate the pact if Voom failed to spend $100 million on the service in any given year and by mid-2007, EchoStar had begun laying the groundwork for making that claim, Cablevision has said. Cablevision shut down Voom, which had been part of its Rainbow Media division, in December 2008.