In a defamation action by a securities analyst against a company and its chief executive officer and others, the analyst sought sanctions against defendants for failure to preserve evidence. At about the time the defendant company became aware of the analyst’s lawsuit, the company’s general counsel orally instructed the company’s chief executive officer and vice president of finance to preserve relevant materials. However, the officers did not inform the general counsel about the steps they took to preserve information, and the general counsel did not follow up on his instructions. Backup tapes continued to be overwritten for months after suit was filed. Also, there was a “unique procedure” for downloading the CEO’s email to his personal laptop and then deleting that email from company servers.

The court held that the company’s efforts to preserve electronically stored information were “clearly inadequate.” Failure to preserve backup tapes prior to the Zubulake IV decision (Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 218 (S.D.N.Y. 2003) and prior to receipt of a letter from plaintiffs counsel demanding preservation of data was “merely” negligent, but subsequent failures to preserve backup tapes were much less excusable. On the other hand, the analyst failed to present any evidence that documents favorable to his case had been destroyed. The court thus denied the analyst’s request for an adverse inference instruction. To remedy the company’s deficient preservation of data, the court ordered additional searches of backups of two servers and permitted “a thorough forensic examination” of the CEO’s personal laptop, at defendants’ expense, to recover relevant email that had been deleted.