Should a company be sanctioned as a result of a non-employee’s failure to preserve evidence?

When is a Defendant Liable for Spoliation by a Non-Party?

Author: Luke Iovine
Case Citation: Ronnie Van Zant, Inc. v. Pyle, No. 17 Civ. 3360 (RWS), 2017 WL
3721777 (S.D.N.Y. Aug. 28, 2017)
Employer/Personnel Implicated: Record Company; Third-Party
eLesson Learned: A party (here, a Record Company) can be sanctioned for spoliation and held liable for actions by a non-party when the non-party is under its control. Control is to be construed broadly and is defined as the “practical ability to obtain documents from another, irrespective of legal entitlement.”
Tweet This: Sanctions for Third Party Spoliation

Ronnie Van Zant, Inc., Gary R. Rossington, Johnny Van Zant, and other trustees and personal representatives (“Plaintiffs”) filed a complaint alleging the violation of a Consent Order and are seeking a permanent injunction against Cleopatra Records and awards of cost and attorney fees against Artimus Pyle (“Defendants”). Members of Lynyrd Skynyrd tragically passed away as a result of a plane crash in 1977. The surviving members agreed to never perform as Lynyrd Skynyrd again. However, in 1988, during a tribute tour, a disagreement arose over the use of the Lynyrd Skynyrd name. Ultimately, the members entered into a Consent Order restricting how the members could use the name and other aspects of the band. One clause stated: “In no event shall [the members] implicitly or through inaction authorize the violation of the terms hereof by any third party.”

Pyle, a signatory of the Consent Order, ceased performing with the surviving members in 1991 and signed a termination agreement. Pyle eventually aided and contributed to the production of a Lynyrd Skynyrd film based on the plane crash, a film produced by Cleopatra Records “film affiliate.” Cleopatra hired John Cohn to write and direct the film, however, Cohn was not a Cleopatra employee. Pyle was ultimately contracted to narrate the film and receive 5% of the Film’s receipts, amongst other involvements.

Plaintiffs sent Cleopatra a cease and desist letter to stop all production on the film; however, the request was ignored. Pyle worked with Cohn, more specifically, exchanged numerous detailed text messages regarding the movie’s production. Immediately after Plaintiffs sought action against Cleopatra and following the end of filming, Cohn switched cell phone providers, acquired a new phone, and ultimately did not preserve any text messages sent and received from Pyle.

Plaintiffs requested the Court issue an adverse inference sanction against defendants for spoliation of text message evidence between Cohn and Pyle and the request was granted.

A court can sanction a party if electronically stored information that should have been preserved in the anticipation of litigation is lost because a party failed to take responsible steps to preserve it.  F.R.C.P 37(e). In addition, if the party that failed to preserve ESI “acted with the intent to deprive another party of the information’s use in litigation,” then the court can dismiss the action or enter a default judgment. Id. With respect to Cleopatra’s liability as a result of Cohn’s failure to preserve (non-party), Cleopatra can be sanctioned because the ESI was under its “control.” [ESI} is under a party’s control if the party can practically obtain the [information], irrespective of legal entitlement. Further, the “cooperative relationship” and “common sense” indicates that Cohn’s texts with Pyle were within Cleopatra’s control. Despite an invalid subpoena for discovery of the information, “a district court may impose sanctions for spoliation” without a discovery order. West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir. 1999). In conclusion, Cohn’s actions, within the control of Cleopatra, were deliberate and this type of behavior weighs in favor of an adverse inference. The information destroyed (quality of interaction and relationship between Pyle, the Consent Order’s Signatory, and Cohn, the principal writer and singular director of the Film) was developed through these text messages. The majority held an adverse inference as to the missing text messages was to be presumed against Cleopatra and a permanent injunction the film’s production was granted. Attorney fee’s and costs were also awarded.

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