In Einstein v. 357 LLC, 2009 N.Y. Misc. LEXIS 3636 (Sup. Ct. New York, Nov. 12, 2009), Judge Charles E. Ramos denied plaintiffs' request to strike the pleadings of defendant The Corcoran Group, but ordered an adverse inference instruction for misleading plaintiff and the court regarding their efforts to preserve and produce electronically stored information.

The case is predicated on the allegedly defective design, construction, development and deceptive marketing of a condominium unit. In response to Corcoran's document demand responses, plaintiffs moved to compel the production of certain emails or, in the alternative, to strike Corcoran's pleadings.  Plaintiffs' alleged that defendants failed to produce certain emails, copies of which had already been produced by plaintiffs to Corcoran.  The court directed that each of the Corcoran Defendants produce their hard drives to a third-party vendor for imaging and inspection.  The Corcoran Defendants complied with the court's order, but the vendor later failed to find any responsive emails on the hard drives.

The court held a hearing to determine whether any emails had been deleted and whether the Corcoran Defendants had a valid explanation for the lack of emails on the hard drives. At the hearing, the court found that Corcoran failed to issue a timely litigation hold and that the defendants continued to delete emails pursuant to its document retention policy even after the commencement of litigation.  In addition, the court found that the Corcoran Defendants' counsel made numerous statements to plaintiffs and the court that were materially false, including the fact that the defendants had in good faith produced all of the responsive documents that they could locate.  The court found that the defendants selectively produced emails.

Thus, the court granted plaintiffs' motion and ordered an adverse inference instruction that defendants knew of the water filtration problem and willfully misled the plaintiffs by concealing that condition from them during the sales process.  The plaintiffs were awarded their attorneys fees and costs in connection with both the motion to compel and the review of the hard drives produced, including expert fees charged by their ediscovery vendor.