SDNY Expands Interpretation of “Possession, Custody, or Control” – Orders Adverse Inference Against Company for Spoliation of Text Messages by Non-Party, Independent Contractor on Personal Phone

In Van Zant, Inc. v. Pyle, et al., 270 F. Supp. 3d 656 (S.D.N.Y. 2017), the Southern District of New York ordered an adverse inference against Los Angeles-based Cleopatra Entertainment LLC (“Cleopatra”), based on the conduct of its independent contractor and non-party to the case, Jared Cohn (“Cohn”). Cohn had been hired by Cleopatra to write and direct a motion picture about the 1977 plane crash that killed two members of the Southern rock band Lynyrd Skynyrd.

During the film’s production, Cleopatra and Cohn enlisted the aid of Lynyrd Skynyrd drummer Artimus Pyle (“Pyle”), who, along with other surviving band members (and the estates of deceased members), was party to a 1988 Consent Order that set limits on the permissible use of the Lynyrd Skynyrd name; the likenesses, names, and biographical material of its members; the band’s history; and related items. The Consent Order also detailed the respective parties’ rights to royalties from Lynyrd Skynyrd music, merchandise, and other proceeds, and prohibited the parties from “implicitly or through inaction authoriz[ing] the violation of the terms [of the agreement] by any third party.”

Pyle initially did not make Cleopatra aware of the Consent Order, but plaintiffs (also parties to the 1988 Consent Order) sent Cleopatra a copy, along with a cease and desist letter, after learning about the film. Cleopatra ceased referring to Pyle as a writer or producer of the film, but he remained involved in many aspects of the film’s production process, and regularly exchanged text and phone messages with Cohn to relay historical information about the band, to comment on the outline for the film, and to provide feedback on the script. Pyle was even given a contract that entitled him to 5% of the film’s net receipts.

When plaintiffs became aware that Cleopatra had continued its production of the film it instituted suit. Within days, Cleopatra attempted to modify the terms of its contract with Pyle. That same month, following the end of filming, the director Cohn switched cell phone providers and acquired a new cell phone. Although Cohn backed up pictures from his old phone, he did not preserve old text messages, including those with Pyle.

Following expedited discovery, the plaintiffs requested an adverse inference against the defendants for spoliation of the text message evidence between Cohn and Pyle. In opposition, Cleopatra argued that it could not be sanctioned for the actions of Cohn, a non-party, whose phone was not within the company’s control. The court rejected this argument, holding that even a non-party’s documents will be found “to be under a party’s control if the party has the practical ability to obtain the documents from another, irrespective of his legal entitlement.”

The court noted, among other things, that Cohn was contracted by Cleopatra to work on the film, that he had worked closely with Cleopatra for more than a year, and that he had participated in the litigation by providing documents and submitting to a deposition sought by the plaintiffs. The court placed particular emphasis on the fact that Cohn “ha[d] a financial interest in the outcome of th[e] litigation, since he [wa]s entitled to a percentage of the [f]ilm’s net receipts, which would be zero should Plaintiffs prevail.” While the court stressed that “determining practical control is not an exact science[,]” it found that “common sense” indicated that Cohn’s texts were within Cleopatra’s control. The court also found prejudice resulting from the destruction of the messages, since no other evidence produced by Cleopatra “sp[oke] directly to . . . the quality of interaction between Pyle, the Consent Order’s signatory, and Cohn, the principal writer and singular director of the [f]ilm, a relationship that evidence established was principally developed through text messages.” Finally, the court found that Cohn’s actions, specifically “getting a new phone after Plaintiffs brought the instant action and managing to back-up pictures but, somehow, not text messages,” evidenced “the kind of deliberate behavior that sanctions are intended to prevent[.]”

This case serves as a strong reminder of how broadly courts in the Second Circuit may construe the concept of “control” over electronically stored information. Litigants within the jurisdiction of the Southern District of New York should be mindful that, under certain circumstances, the duty to preserve electronic information extends to information stored on cell phones and other personal devices belonging to independent contractors who are nevertheless under the “practical control” of the litigant-party.

Timothy D. Tremba is an Associate in the Gibbons Employment & Labor Law Department and a member of the Gibbons E-Discovery Task Force.
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