Information management in a big organization is a big job. And because it’s a job that revolves around computers, there are any number of things that can go wrong. Hard drives crash. Employees leave, with no one remembering what happened to their computers. Business divisions or subsidiaries decide, for one reason or another, to store their own data separately and away from your backup drives. The legal standard for spoliation is clearer in some jurisdictions than it is in others. But wherever one happens to be litigating, decisions on the destruction of ESI (i.e., electronically-stored information) are often highly fact-specific, nuanced, and technical. As a result, those decisions can also be unpredictable.
A recent decision of the N.Y. Court of Appeals is a case study in the consequences of technological mishaps and corporate miscommunications. Pegasus Aviation v. Varig Logistica, 26 N.Y.3d 543 (2015), began as a dispute between a company that leases private cargo planes (Pegasus) and one of its clients (Varig). After Varig defaulted on its aircraft lease, Pegasus sued both Varig and its new owner, MatlinPatterson. MatlinPatterson had purchased Varig in a bankruptcy proceeding in Brazil just one year before the lawsuit and inherited the Pegasus relationship. As the litigation progressed, Pegasus served discovery on both Varig and MatlinPatterson, and the following facts came to light: (1) both before and after MatlinPatterson’s acquisition of Varig, Varig did not have any system of email preservation; (2) both before and after MatlinPatterson’s acquisition of Varig, data on the computer of a departing Varig employee was simply deleted; (3) at various times, including during the litigation, Varig suffered computer crashes that resulted in the destruction of data; and (4) Varig, which was represented by counsel separate from MatlinPatterson’s, never implemented a litigation hold.
