Obligation to Preserve Is Not an Obligation to Create New Data

Walkie Check Productions, LLC v. ViacomCBS Inc.

S.D.N.Y. 7/24/23 7:00

Why This Case Is Important

Potential litigants should understand that they have an obligation to preserve data once there is “a reasonable anticipation of litigation,” but that does not translate into an affirmative obligation to create (and preserve) new types of data that would not otherwise exist.

Overview

In this copyright infringement case, the Plaintiff filed a motion for spoliation sanctions against the Defendant for their failure to record and preserve episodes of a series that were livestreamed on Instagram Live and\/or Facebook Live after having been informed of the Plaintiff’s intent to file suit.

Plaintiff owned a copyright for a television show idea called House Party, which broadcast “exclusive and engaging” afterparties with musicians and celebrities from a New York City brownstone, and had pitched it to Defendants, including the Black Entertainment Television (BET) network, but BET passed on the idea twice.

In 2020, BET developed a streaming series called House Party, which did not appear on television but was livestreamed on Instagram Live and/or Facebook Live from March 2020 – January 2021. In July 2020, an attorney for the Defendants received a letter notifying them of Plaintiff’s intent to file suit for copyright infringement as 39 of the 90 episodes were similar to its show.

During discovery, Plaintiff argued that Defendants should be sanctioned for spoliation through an adverse inference because of their failure to record all of the episodes of House Party. Under some of the livestream formats, episodes were never recorded. Accordingly, no recordings were available for approximately 26 of the 39 episodes in question.

Ruling

• Spoliation Definition Clarified. Spoliation is defined as the “destruction or significant alteration of evidence, or the failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation.” FRCP 37 allows for sanctions for failure to comply with a discover order or failure to preserve ESI. Some courts have even imposed sanctions for discovery failures under their “inherent power.” 
• When Sanctions Are Warranted. The judge’s ruling defined a three-fold standard for assessing when sanctions are warranted— first, the party must have had an obligation to preserve the data; second, the party must have failed to preserve under a “culpable state of mind;” and, third, the destroyed evidence must have been relevant to a claim or defense in the litigation. An addition to these criteria proved pivotal—that “[f]or spoliation sanctions to be appropriate it is necessary that the sought-after evidence actually existed and was destroyed.”
•  Sanctions Not Warranted. In conclusion, the court found that sanctions were not warranted because the Plaintiff failed to show that the Defendants violated their obligation to preserve. While agreeing that the episodes were not available, the ruling noted that recording the livestreams would have constituted “an extra, affirmative step.” Preservation obligations, the court explained, “are exactly that--obligations to preserve potential evidence that, by definition, must already exist,” and “a failure to create records — as opposed to the destruction of records that were kept — is not spoliation.”

Expert Perspective

by: David Cohen, Esq., Chair - E-Discovery Group, Reed Smith LLP

This case makes an interesting distinction between failure to preserve versus failure to record evidence. Past cases have held that failure to turn off automatic deletion of already existing or recorded data can constitute spoliation of evidence—such as when parties fail to preserve potentially relevant text messages or recorded audios or videos. In this case, however, U.S. District Court Judge Katherine Polk Failla declined to extend preservation duties to impose a new obligation to record, ruling that you cannot have spoliation of information that was never recorded in the first place.