To Be Argued By:
PETER T. SHAPIRO
New York County Clerk’s Index No. 768000/08E
New York Supreme Court
APPELLATE DIVISION—FIRST DEPARTMENT
In Re: Steam Pipe Explosion at 41st Street and Lexington Avenue
BRIEF FOR DEFENDANT-THIRD-PARTY DEFENDANT-
RESPONDENT TEAM INDUSTRIAL SERVICES, INC.
d
PETER T. SHAPIRO
DARRELL J. WHITELEY
DANIEL J. FOX
LEWIS BRISBOIS BISGAARD
& SMITH LLP
77 Water Street, Suite 2100
New York, New York 10005
(212) 232-1300
peter.shapiro@lewisbrisbois.com
darrell.whiteley@lewisbrisbois.com
daniel.fox@lewisbrisbois.com
Attorneys for Defendant-Third-Party
Defendant-Respondent Team
Industrial Services, Inc.
REPRODUCED ON RECYCLED PAPER
4825-1257-7052.1 i
TABLE OF CONTENTS
PRELIMINARY STATEMENT ............................................................................... 1
COUNTER-STATEMENT OF QUESTIONS PRESENTED .................................. 3
COUNTER-STATEMENT OF FACTS .................................................................... 4
ARGUMENT ........................................................................................................... 16
I. THE IAS COURT’S DISCOVERY RULINGS
SHOULD NOT BE DISTURBED ........................................................ 16
A. In Camera Review Was Appropriate and The
IAS Court’s Rulings After Conducting That
Review Should Stand ..................................................................... 19
B. It Is Proper To Preclude Burdensome Discovery
Concerning This Prior Dissimilar Incident .................................... 24
II. CON EDISON HAS NOT MET ITS BURDEN
TO ESTABLISH THE BASIS FOR SPOLIATION
SANCTIONS BECAUSE THERE HAS BEEN NO
DESTRUCTION OR DISCARDING OF DOCUMENTS ................... 31
CONCLUSION ........................................................................................................ 38
4825-1257-7052.1 ii
TABLE OF AUTHORITIES
Decisions
Aaron v. Pattison, Sampson, Ginsberg Griffin, P.C.,
69 A.D.3d 1084 (3d Dep’t 2010) ................................................................... 27
Ahroner v. Israel Discount Bank, 79 A.D.3d 481 (1st Dep’t 2010) ........................ 32
Allen v. Crowell-Collier Pub. Co., 21 N.Y.2d 403 (1968) ................................ 16, 18
Andon v 302-304 Mott St. Assoc., 94 N.Y.2d 740 (2000) ................................ 17-19
Ashford v. Tannenhauser, 108 A.D.3d 735 (2d Dep’t 2013) ............................ 35, 36
Barahona v Trustees of Columbia Univ. in City of N.Y.,
16 A.D.3d 445 (2d Dep’t 2005) ............................................................... 32, 34
Brady v Ottaway Newspapers, 63 NY2d 1031 (1984) ............................................ 17
Budano v. Gurdon, 97 A.D.3d 497 (1st Dep’t 2012) .............................................. 29
Cuevas v. 1738 Assoc., LLC, 96 A.D.3d 637 (1st Dep’t 2012) .............................. 34
Curiel v. Loews Cineplex Theaters, Inc., 68 A.D.3d 415 (1st Dep’t 2009) ............ 37
Daniels v. Fairfield Presidential Mgm’t Corp.,
43 A.D.3d 386 (2d Dep’t 2007) ..................................................................... 26
Don Buchwald & Assoc., Inc. v. Marber-Rich,
305 A.D.2d 338 (1st Dep’t 2003) ............................................................ 16, 17
Duluc v. AC & L Food Corp., 2012 NY Slip. Op. 05243
(1st Dep’t July 10, 2014) ......................................................................... 31, 32
Elmore v. 2720 Concourse Assoc., L.P., 50 A.D.3d 493 (1st Dep’t 2008) ............ 17
Fireman’s Fund Ins. Co. v Sweeney & Harkin Carpentry & Dry Wall Corp.,
78 A.D.3d 650 (2d Dep’t 2010) ............................................................... 32, 35
Gibbs v. St. Barnabas Hospital, 61 A.D.3d 599 (1st Dep’t 2009) ........................... 31
Gjonaj v. Otis Elevator Co., 38 A.D.3d 384 (1st Dep’t 2007) ................................ 25
Gottlieb v. Northriver Trading Co. LLC, 106 A.D.3d 580 (1st Dep’t 2013) .......... 20
4825-1257-7052.1 iii
GS Plasticos Limitada v. Bureau Veritas Consumer Prod. Services, Inc.,
112 A.D.3d 539 (1st Dep’t 2013) ............................................................ 19, 21
Harris v. Schmidt, 117 A.D.3d 1569 (4th Dep’t 2014) ........................................... 20
Herbert v. Sivaco Wire Corp., 289 A.D.2d 71 (1st Dep’t 2001) ............................. 25
Jordan v. Blue Circle Atl., Inc., 296 A.D.2d 752 (1st Dep’t 2002) ......................... 17
Kolody v. Supermarkets Gen. Corp., 163 A.D.2d 276 (2d Dep’t 1990) ................. 26
Lipco Electrical Corp. v. ASG Consulting Corporation,
117 A.D.3d 687 (2d Dep’t 2014) ................................................................... 34
Mahoney v. Turner Constr. Co., 61 A.D.3d 101 (1st Dep’t 2009) .................... 19, 20
Mann v. Cooper Tire Co., 33 A.D.3d 24 (1st Dep’t 2006) ...................................... 17
McGilvery v New York City Tr. Auth., 213 A.D.2d 322 (1st Dep’t 1995) ............ 37
Mendelowitz v. Xerox Corp., 169 A.D.2d 300 (1st Dep’t 1991) ............................ 26
Mohammed v. Command Sec. Corp., 83 A.D.3d 605
(1st Dep’t), lv. denied, 17 N.Y.3d 708 (2011) .............................................. 32
O’Neill v. Oakgrove Constr., 71 N.Y.2d 521 (1988) .............................................. 16
Orthotec, LLC v. HealthpointCapital, LLC,
106 A.D.3d 472 (1st Dep’t 2013) .................................................................. 32
Palermo Mason Constr,, Inc. v. Aark Holding Corp.,
300 A.D.2d 460 (2d Dep’t 2002) ................................................................... 16
Pegasus Aviation I, Inc. v. Varig Logistica S.A.,
2014 Slip. Op. 04047 (1st Dep’t June 5, 2014) ............................................. 33
People v. Johnson, 292 A.D.2d 284 (1st Dep’t 2002) ............................................. 20
People v. Arredondo, 226 A.D.2d 322 (1st Dep’t 1996) ......................................... 20
Strong v. City of New York, 112 A.D.3d 15 (1st Dep’t 2013) ............................... 33
220-52 Associates v. Edelman, 18 A.D.3d 313 (1st Dep’t 2005) ........................... 37
Vasquez v. Soriano, 106 A.D.3d 545 (1st Dep’t 2013) ........................................... 32
4825-1257-7052.1 iv
VOOM HD Holdings v. Echostar Satellite L.L.C.,
93 A.D.3d 33 (1st Dep’t 2012) ................................................................ 31, 32
Wilkie v. New York City Health and Hosps. Corp.,
274 A.D.2d 474 (2d Dep’t), lv. denied, 96 N.Y.2d 705 (2000) .................... 34
Statutes
CPLR 3101(a) .................................................................................................... 16, 18
Treatises
McKinney’s Cons Laws of NY, Patrick M. Connors,
Practice Commentaries, Book 7B, CPLR C3101:5A .................................... 17
4825-1257-7052.1 1
PRELIMINARY STATEMENT
Respondent Team Industrial Services, Inc. (“Team”) submits this brief in
opposition to the appeals filed by appellants Consolidated Edison, Inc. and
Consolidated Edison Company of New York, Inc. (collectively “Con Edison”) with
respect to two discrete discovery issues that Con Edison focuses on even while a
massive disclosure process in a complex high stakes litigation continues to unfold
under the supervision of the IAS Court. As demonstrated below, both appeals should
be denied.
Con Edison is allegedly responsible for the catastrophic rupture of a steam pipe
in midtown Manhattan which was part of its steam system (which is the world’s
largest such system), precipitating personal injuries and property damages asserted in
roughly 100 actions consolidated for discovery before the IAS Court. Con Edison has
asserted third-party claims against Team, contending that Team’s application of an
excessive amount of sealant in the process of repairing a leak on a flange months
beforehand caused or contributed to the rupture. This appeal focuses on Con Edison’s
quixotic, misguided effort to conjure support for its third-party claims. Con Edison
learned that Team had been sued several years earlier as a result of an incident at a
plant in Texas. It contends that the prior incident supports finding Team liable herein,
ignoring wilfully that the two incidents were entirely dissimilar because, among other
reasons addressed below, the Texas incident involved the alleged failure of a leak
4825-1257-7052.1 2
enclosure unit that Team allegedly designed in a defective manner at the time Team
was performing its work, whereas the subject incident involves solely Team’s
application of sealant at Con Edison’s request and direction within Con Edison’s
system four months before the rupture occurred.
Based on Con Edison’s motion to compel documents pertaining to the Texas
incident, the IAS Court conducted an in camera review of ten boxes of documents
Team was able to locate from the Texas litigation which had been in the possession of
its former outside counsel. The IAS Court determined based on its review of the files
– including deposition transcripts, expert reports and confidential attorney/client
communications assessing the liability issues - that Team did not have to produce the
documents. Con Edison sought renewal and reargument as to that decision, following
which the Court adhered to its ruling and provided a detailed analysis of why the
documents concerning the prior dissimilar accident did not have to be produced. Con
Edison’s appeal challenges that ruling. Team submits that this Court should afford the
appropriate deference to the IAS Court and affirm. The IAS Court, having reviewed
the evidence and being fully familiar with the claims and defenses in this case, was in
the best position to make a determination as to whether documents had to be
produced. It was clearly appropriate for the IAS Court, as part of its careful
management of the extensive discovery in this case, which has been ongoing since
2008, to so rule and to thereby control discovery to some extent notwithstanding Con
4825-1257-7052.1 3
Edison’s continuing efforts to litigate endlessly and at great expense in a desperate
effort to avoid the liability that it appears to face as a result of the failure of its system.
Con Edison’s second appeal represents its ludicrous persistence in seeking
severe spoliation sanctions predicated on its contention that Team destroyed the bulk
of the documents concerning the Texas litigation. The appeal is not tenable given that
Team has set the record straight and demonstrated that no such document destruction
took place, and that the litigation files are extant and available, and it has produced
documents in accordance with the Court’s directives. Con Edison’s apparent belief
that Team has not accurately represented the facts concerning the preservation of the
documents is predicated on pure speculation. Moreover, because, as the IAS Court
ruled, the documents are irrelevant and not discoverable or admissible, Con Edison
cannot have been harmed by virtue of Team’s handling of the document production
issues. Under the circumstances, this case simply does not present the type of conduct
and resulting prejudice that would furnish a predicate for striking Team’s answer or
imposing any less severe spoliation sanctions.
COUNTER-STATEMENT OF QUESTIONS PRESENTED
1. Did the IAS Court properly deny appellant’s motion to compel
respondent to produce documents relating to a prior litigation filed years earlier
concerning an incident involving a different system and as to any allegedly similar
incidents, when the IAS Court reasonably made its own determination as to the
4825-1257-7052.1 4
proper scope and limits of discovery in a complex matter in which it has been heavily
involved and after conducting an in camera review of the documents?
The IAS Court correctly denied Con-Edison’s motion to compel discovery.
2. Did the IAS Court rule properly in denying appellant’s motion for
spoliation sanctions where investigation disclosed that the feared destruction of the
documents by a third party did not actually happen and as a result there is no possible
prejudice to any party from the handling of the files, which could still be produced if
they were ever determined to be relevant and discoverable, and given the present
controlling ruling that the documents at issue are irrelevant and not discoverable?
The IAS Court correctly denied appellant’s motion for spoliation sanctions.
COUNTER-STATEMENT OF FACTS
Background
On July 18, 2007, at the intersection of 41st Street and Lexington Avenue in
Manhattan (the “Site”), a Con Edison steam pipe ruptured (the “Rupture”). In the
aftermath of the Rupture, following a thorough investigation, the New York Public
Service Commission (“PSC”) identified multiple deficiencies in Con Edison’s
maintenance and operation practices. The deficiencies identified by the Commission
included: Failing to have a plan in place for direct manhole inspections despite
knowledge that this manhole was prone to flooding; failing to adequately address
known damage to its pipe before it ruptured; failing to properly maintain the steam
4825-1257-7052.1 5
system by opting to apply temporary repairs to a habitually leaking flange instead of
effectuating a permanent repair; failing to adequately inspect steam traps and remove
debris therefrom; and failing to properly inspect failed steam traps to determine the
cause of failure. (A. 542)
More than 100 lawsuits were filed against Con Edison, in some of which Team
was also named as a defendant, alleging claims for personal injury, property damages
and business interruption (A. 132-133). Con Edison faces potentially huge liability for
its clearly deficient practices which led to the Rupture and thereby allegedly caused
the plaintiffs’ damages. Accordingly, Con Edison is desperately seeking to shift the
blame for the Rupture to third parties including the City of New York and Team with
the hope of transferring the responsibility to pay significant damages.
Team had been retained regularly by Con Edison to perform leak repair work
on various parts of Con Edison’s steam system. Team would perform work on Con
Edison systems only when Con Edison requested that it perform work.
Notwithstanding Con Edison’s knowledge that leak sealing was only a temporary
repair, it habitually requested that Team return to the Site on multiple occasions to
“re-pump” the leaking flange. While engaging in this course of conduct, Con Edison
wilfully and knowingly eschewed effectuating a necessary and permanent repair that
would have eliminated the need for repeated leak repair work. (A. 544)
4825-1257-7052.1 6
Con Edison bases its claims against Team on the theory that leak sealant
applied by Team migrated into the steam system, clogged the steam trap combination
adjacent to the flange manhole and prevented the traps from properly functioning on
the date of the Rupture. In fact, Team last performed such repair work for Con Edison
at the Site in March 2007; more than four months prior to the Rupture. In the
preceding years, Team had repaired the same leaking flange 15 times at Con Edison’s
request and direction. Con Edison had inspected the subject steam trap combination
several times between the date of Team’s last visit to the Site and the date of the
Rupture, without identifying any deficiency as to the steam traps (A. 544-545).
Con Edison avers that Team failed to warn it of the dangers of mainlining (i.e.,
sealant entering the process stream) despite Con Edison’s possession of ample records
showing that Team delivered such warnings. Moreover, Con Edison knew before the
Rupture that leak repair sealant could get into the steam system and that debris in the
steam system could clog steam traps. Despite this pre-incident knowledge, Con
Edison appears to rely on the incredible defense that it never imagined that sealant
could be a form of debris that could clog the steam traps.
Con-Ed’s Third-Party Claims Against Team
On May 28, 2008, Con Edison filed Third-Party Complaints against Team and
the City of New York in each of the approximate 100 lawsuits filed against Con
Edison in connection with the Rupture (A. 542). The Third-Party Complaints contain
4825-1257-7052.1 7
causes of action for breach of contract, breach of the duties of care, competence, and
diligence, contractual and common law indemnification, contractual duty to procure
insurance, contribution, strict products liability, and negligent design and failure to
warn (A. 176). Con Edison alleges, inter alia, that Team negligently performed leak-
sealing services, misrepresented the safety of its leak-sealing methods, and failed to
minimize the quantity of sealant injected (A. 163).
Team has been vigorously defending the coordinated actions since 2008
throughout a lengthy and expensive discovery process. Discovery proceedings have
been intensive and have been conducted under the close supervision of the IAS Court
and now a Special Master. Throughout discovery, the IAS Court has taken steps to
ensure that discovery does not become unduly protracted; hence, active case
management and controls imposed by the IAS Court are mandatory. This appeal stems
from the IAS Court’s rulings that are part and parcel of its sage exercise of its
appropriate exercise of control over the disclosure proceedings herein.
The present disputes arise from a document demand Con Edison served on July
23, 2008 (the “Demand”; A. 179). The Demand sought Team’s production of
documents relating to any prior claims and litigation arising out of Team’s leak
sealing work including specifically the production of the litigation file for an unrelated
lawsuit filed in the State of Texas in which Team was one of several defendants (the
“Diamond Shamrock Litigation”). In responding to the Demand, Team initially
4825-1257-7052.1 8
misapprehended the size of the Diamond Shamrock Litigation file. Team’s Texas
counsel, Darrell Greer, Esq., had estimated the size of the file at approximately 100
bankers’ boxes. However, he was only able to locate eight boxes from a storage
facility. An erroneous assumption was made that the remainder of the file had been
lost and/or destroyed by Mr. Greer’s former law firm pursuant to that firm’s document
retention policies. (A. 548-549)
On April 24, 2013, following Con Edison’s motion to compel the production of
the Diamond Shamrock Litigation file, the IAS Court ordered Team to produce the
documents contained in the eight boxes that had been located for in camera inspection
(A. 48).Team complied with the IAS Court’s directive and produced the documents
for the required in camera inspection. Team’s production consisted of ten boxes
containing all of the Diamond Shamrock Litigation files received from Texas counsel,
including attorney/client privileged documents. When the Court conducted its in
camera review, it had possession of all Diamond Shamrock Litigation files that had
been located and that were known to exist at that time, which contained the critical
documents from that litigation.
The aggregate ten boxes Team furnished for the in camera review contained the
trial working file of Team’s defense counsel in the Diamond Shamrock Litigation,
including: (1) The correspondence exchanged by and between the parties as well as
attorney-client privileged communications between Team and its counsel; (2) The
4825-1257-7052.1 9
discovery demands and responses exchanged by and between the parties including but
not limited to Team’s complete discovery responses, Interrogatories and document
disclosures; (3)The parties’ deposition notices ; (4) The memos/emails exchanged by
and between the parties as well as attorney-client privileged communications between
Team and its counsel; (5) The client documents provided by Team to its defense
counsel; (6) The complete OSHA investigation file; (7) Privileged attorney notes; (8)
Deposition transcripts of almost all witnesses including all Team witnesses; and (9)
The expert reports and expert disclosures (A. 1166-1167).
Based on its in camera review, the Court issued its June 18, 2013 “First Order”,
which held that the Diamond Shamrock Litigation documents did not have to be
produced to the parties (A. 43). The First Order stated in pertinent part as follows:
Diamond Shamrock records: Notwithstanding allegations that Team’s injection
of too much sealant caused the fire at issue in that case, as the records reflect
that an investigation into the fire concluded that Team’s injection or application
of sealant did not cause or contribute to the incident, none of the records are
discoverable.
(A. 43)
The First Order did not resolve this issue to Con Edison’s satisfaction. Con
Edison conducted a further search of public records to locate additional Diamond
Shamrock Litigation documents. In support of its motion to reargue and renew, Con
Edison contended that the documents it located, including a report authored by one of
the plaintiff’s experts in the Diamond Shamrock Litigation which was among the
4825-1257-7052.1 10
documents provided to the IAS Court for its in camera review, were sufficiently
analogous to the allegations in the instant matter to render the Diamond Shamrock
Litigation file subject to disclosure. (Brief pp. 20-21)
The IAS Court then issued the “Second Order”, dated December 9, 2013, which
granted leave to renew but denied the renewal motion (A. 100). The Court
reconfirmed that Con Edison was not entitled to review the files. The Court’s
persuasive reasoning in support of that conclusion is addressed below in Point I.
The Second Order also denied Con Edison’s motion insofar as it sought
sanctions against Team for spoliation of evidence (A. 106).
The IAS Court subsequently issued the Third Order, dated December 23, 2013,
which denied as moot yet another discovery motion Con Edison had filed in June
2013 in light of the foregoing rulings (A. 108).
Con Edison’s Allegations Concerning Spoliation
Con Edison asserts that the IAS Court erred in denying its spoliation motion.
Con Edison’s motion was predicated entirely on stale and inaccurate information.
Team has demonstrated that the size of the Diamond Shamrock Litigation file had
been overestimated and, more importantly, it has clarified that the file was never
discarded or destroyed.
Initially, although Team objected to Con Edison’s demands for production of
those documents, Team engaged in good faith efforts to identify and obtain the files as
4825-1257-7052.1 11
well as other materials sought by Con Edison, which were not in the possession of
Team or its litigation counsel in this action. Eventually, Team’s former outside
litigation counsel located several boxes, all of which were provided to the IAS Court
for its in camera review. A further search spearheaded by Team’s former attorney
ultimately yielded an additional 39 boxes containing document discovery exchanges
among parties and non-parties from the Diamond Shamrock Litigation. Team
promptly advised the IAS Court upon learning that the additional boxes had been
found. The Court did not deem a further in camera review necessary because the
initial production contained sufficient information for the Court to determine that the
Diamond Shamrock Litigation was not relevant to the instant matter. (A. 521, 548-
549, 1000, 1015-1026, 1099, 1161-1162; 1164-1169)
Based on the IAS Court’s review of the ten boxes from the trial file, including
extensive written discovery exchanged between the parties, deposition transcripts,
attorney/client privileged communications and expert reports, it ruled (correctly) that
Team did not have to produce the Diamond Shamrock Litigation file. For this reason
alone, Con Edison’s spoliation motion was without merit and properly denied. It
would be improper to subject Team to spoliation sanctions for the supposed
destruction of files which were determined to not be relevant and which Team did not
have to produce.
4825-1257-7052.1 12
In any event, as Team demonstrated in opposition to the spoliation motion in
the IAS Court, Con Edison’s position become entirely insupportable because it was
determined that the Diamond Shamrock Litigation files were not destroyed as had
been initially believed (A. 1167-1169). Instead, seemingly missing documents were
merely misplaced and misfiled by Mr. Greer’s former law firm. Mr. Greer ascertained
that the files were located in an off-site storage facility to which they had been sent in
2005, prior to the Rupture and the commencement of this litigation (A. 1168-1169).
Continued good faith search efforts enabled Team to identify an additional 39 boxes
of materials from the Diamond Shamrock Litigation. Team advised the IAS Court that
those documents could be reviewed in camera as well if the Court so directed (A.
1161; 1168). Unsurprisingly in view of the Court’s ruling concerning the previous
documents, the Court did not direct a further in camera inspection and did not compel
production thereof to Con Edison.
Con Edison is undaunted by this showing, and shockingly continues to argue -
as set forth in its Brief to this Court - that Team destroyed or discarded at least part of
the Diamond Shamrock Litigation files despite no longer having no valid factual basis
for that contention. Team corrected the record concerning the universe of documents
in a manner that Con Edison’s Brief only grudgingly acknowledges. Team clarified
that the initial communication to Con Edison that the Diamond Shamrock Litigation
file consisted of approximately 100 bankers’ boxes in size was inaccurate and was
4825-1257-7052.1 13
based on an over-estimation by Mr. Greer. He had made an estimate based on solely
his memory of the apparent volume of documents as reflected by the appearance of
two hotel “war rooms” he used during the trial (A. 1165-1166). Mr. Greer clarified
that he had never known the actual number of boxes that contain Diamond Shamrock
Litigation materials and that his knowledge was vague because he was not involved
with his prior firm’s 2005 activities in closing, boxing and storing the file after the
case concluded (A. 1166-1168). A continuing search performed by Mr. Greer’s firm
uncovered the additional 39 boxes containing the Diamond Shamrock Litigation
materials. It had been difficult to find those 39 boxes because they were not labeled or
indexed in 2005 when placed into storage by Mr. Greer’s prior law firm (A. 1167-
1168). The boxes remain extant and stored in Texas (A. 1168).
Given Team’s clarifications, there is no factual basis to credit the supposition
on which Con Edison predicates its contention that Team engaged in the spoliation of
evidence. And since the IAS Court conducted an in camera review of the operative
documents and determined that the Diamond Shamrock Litigation file was irrelevant
and not subject to disclosure, Con Edison’s spoliation argument rests on an evanescent
foundation and should be denied.
The Diamond Shamrock Litigation
In order to appreciate the IAS Court’s ruling that the Diamond Shamrock
Litigation file was not subject to production, it is appropriate to address the underlying
4825-1257-7052.1 14
facts and allegations in that case, which are in stark contrast to the facts and
allegations in the case at bar.
In 2001, Team was in the process of installing an enclosure around a
refurbished valve at the Diamond Shamrock alkylation refinery in Texas, when the
valve failed and a fire occurred (A. 549). Litigation ensued. The predominant
allegation against Team was that it failed to use good engineering practice by failing
to incorporate a “strongback” in its design of the enclosure which would have
supported the valve during the installation of the enclosure (A. 549).
Here, by contrast, the Rupture occurred months after Team’s most recent leak
repair work at the Site, and none of the allegations asserted against Team involve an
allegedly negligent engineering design with respect to an alkylation refinery. In fact,
the Rupture occurred because Con Edison’s steam system became overloaded at the
Site following a period of heavy rainfall, exacerbated by Con Edison’s failure to
adequately monitor and remove water from the manhole (A. 576-580). Among the
myriad findings of malfeasance against Con Edison, there is an allegation that
material was found inside the steam trap assembly adjacent to the Site, which is
believed to have obstructed the trap and prevented it from functioning at full capacity
on the date of the incident (A. 579). The crux of Con Edison’s claim against Team is
that the material found in the steam trap was Team’s sealant from a leak repair job
performed months before the incident. However, even with regard to this allegation, it
4825-1257-7052.1 15
was Con Edison’s persistent use of leak repair instead of effectuating the permanent
repair of removing the leaky flange that caused the Rupture (A. 579).
In the final analysis, Con Edison contends that it is entitled to the Diamond
Shamrock Litigation file because the allegations against Team in that action arose out
of Team’s leak repair work. Con Edison disregards that virtually all of the facts and
allegations in the two actions are dissimilar. However, the IAS Court, which reviewed
the entire set of operative documents in the Diamond Shamrock file recognized the
obvious disparity and held, in denying renewal with respect to Con Edison’s second
fruitless attempt to obtain access to the Diamond Shamrock Litigation files, that the
condition that precipitated the two incidents were “dissimilar” and the parties’
allegations were “disparate” (A. 104).
4825-1257-7052.1 16
ARGUMENT
I.
THE IAS COURT’S DISCOVERY RULINGS
SHOULD NOT BE DISTURBED
It is elementary that pre-trial disclosure pursuant to CPLR Article 31 is broad.
However, it is equally elementary that disclosure is not unlimited. When a court is
asked to determine whether materials are discoverable, “competing interests must
always be balanced; the need for discovery must be weighed against any special
burden borne by the opposing party. O’Neill v. Oakgrove Constr., 71 N.Y.2d 521, 529
(1988). “The courts do undoubtedly possess a wide discretion to decide whether
information sought is ‘material and necessary’ to the prosecution or defense of an
action.” Allen v. Crowell-Collier Pub. Co., 21 N.Y.2d 403, 406 (1968)(quoting CPLR
3101(a); case citation omitted).”Unlimited disclosure is not required, and supervision
of disclosure is generally left to the trial court’s broad discretion.” Palermo Mason
Constr,, Inc. v. Aark Holding Corp., 300 A.D.2d 460, 461 (2d Dep’t 2002)(citation
and internal quotation marks omitted).
The trial courts are empowered with broad discretion concerning discovery
conducted by the parties. It is necessary for the court to have such discretion in order
for the civil justice system to function properly. In accordance with that discretion, the
governing rule in this Department is that “‘deference is afforded to the trial court’s
discretionary determinations regarding disclosure.’” Don Buchwald & Assoc., Inc. v.
4825-1257-7052.1 17
Marber-Rich, 305 A.D.2d 338 (1st Dep’t 2003), quoting Jordan v. Blue Circle Atl.,
Inc., 296 A.D.2d 752 (1st Dep’t 2002). See also, e.g., Elmore v. 2720 Concourse
Assoc., L.P., 50 A.D.3d 493 (1st Dep’t 2008). As this Court has stressed:
[D]iscovery determinations rest within the sound discretion of the motion court.
(Andon v 302-304 Mott St. Assoc., 94 NY2d 740, 745 [2000], citing Brady v
Ottaway Newspapers, 63 NY2d 1031, 1032 [1984].) Further, we note that it is
rare that such motion court determinations are reversed or modified on the law.
(Patrick M. Connors, Practice Commentaries, McKinney’s Cons Laws of NY,
Book 7B, CPLR C3101:5A, at 20.)
Mann v. Cooper Tire Co., 33 A.D.3d 24, 28-29 (1st Dep’t 2006).
Thus, while “[t]his Court is vested with the power to substitute its own
discretion for that of the motion court with respect to discovery orders, even in the
absence of abuse . . .” it invokes that “power” only “rarely and reluctantly”. Estate of
Ungar v. The Palestinian Authority, 44 A.D.3d 176, 179 (1st Dep’t 2007).
Such deference should be afforded to the IAS Court’s discovery rulings at issue.
It is apparent that in a consolidated case involving roughly 100 claimants, with many
millions of dollars at issue, and a target defendant in Con Edison with vast resources,
represented by multiple law firms willing and able to engage in an endless battle of
attrition, a significant burden is imposed on the IAS Court committed with the
obligation to manage and oversee the litigation. The IAS Court has done a
commendable job of shouldering that burden. In that capacity, the IAS Court has had
to remain mindful of keeping the consolidated case on track and avoid allowing it to
4825-1257-7052.1 18
become swamped in countless frolics and detours when, as here, such diversions could
well threaten to derail the progress of the litigation.
The burden the IAS Court must shoulder is exemplified by Con Edison’s
misguided continuing focus on the Diamond Shamrock Litigation files to the point of
filing multiple motions and cynically asking repeatedly for spoliation sanctions based
on the supposed destruction of supposedly relevant documents when the crux of the
relevant documents has been reviewed by the IAS Court – which found them not to be
relevant - and the remaining parts of the file not produced for in camera review were
not actually destroyed.
Moreover, the Court of Appeals has recognized that it is appropriate for the
courts to utilize a test of usefulness and reason in assessing whether discovery should
be compelled:
CPLR 3101 (a) entitles parties to “full disclosure of all matter material and
necessary in the prosecution or defense of an action, regardless of the burden of
proof.” What is “material and necessary” is left to the sound discretion of the
lower courts and includes “any facts bearing on the controversy which will
assist preparation for trial by sharpening the issues and reducing delay and
prolixity. The test is one of usefulness and reason” (Allen v Crowell-Collier
Publ. Co., 21 NY2d 403, 406).
Andon v. 302-304 Mott St. Assoc., 94 N.Y.2d 740, 745 (2000)(holding that plaintiff
mother of infant plaintiff could not be compelled to submit to IQ examination).
This Court had interpreted the Court of Appeals’ directives in a manner
germane to the present appeal. In GS Plasticos Limitada v. Bureau Veritas Consumer
4825-1257-7052.1 19
Prod. Services, Inc., 112 A.D.3d 539 (1st Dep’t 2013),the plaintiff appealed from the
denial of its motion to compel disclosure. The Court denied the appeal, stating:
On this record, we conclude that the Supreme Court, which has managed a long
and contentious discovery process and is intimately familiar with this litigation,
providently exercised its discretion in denying nearly all of the discovery
demands at issue here, largely upon its findings, supported in the record, that
defendant had already sufficiently responded to most of them, and that they
otherwise sought irrelevant information for which plaintiff had laid an
insufficient factual predicate (see Andon v 302-304 Mott St. Assoc., 94 NY2d
740 [2000]).
Id. at 540.
Similarly here, the IAS Court has managed a long and contentious discovery
period and has thereby become intimately familiar with all of the myriad dimensions
of the litigation. This Court should rule that the IAS Court providently exercised its
discretion in denying Con Edison’s motion to compel and motion to renew seeking
further disclosure of Team’s files concerning prior dissimilar incidents.
A. In Camera Review Was Appropriate and The IAS
Court’s Rulings After Conducting That Review Should Stand
As this Court well knows, it is a common practice for trial courts faced with
legitimate disputes concerning the production of documents sought by one party
which the adverse party does not want to produce to engage in the in camera review
of the documents. This Court and the other appellate divisions regularly approve of or
direct in camera inspection of documents when valid relevance, privilege or other
bases to resist production to the opposing party are presented. E.g., Mahoney v.
4825-1257-7052.1 20
Turner Constr. Co., 61 A.D.3d 101 (1st Dep’t 2009)(remanding for in camera review
to determine relevance of settlement agreement sought to be compelled); Harris v.
Schmidt, 117 A.D.3d 1569 (4th Dep’t 2014)(trial court properly exercised discretion
in conducting in camera inspection of employment records). See also, People v.
Johnson, 292 A.D.2d 284 (1st Dep’t 2002)(complaint filed by victim’s mother to
Victim Services Agency found not material after in camera review). This Court
affords wide discretion to the trial courts in determining whether in camera review is
appropriate and as to the courts’ determinations based on such reviews. Gottlieb v.
Northriver Trading Co. LLC, 106 A.D.3d 580 (1st Dep’t 2013)(holding that trial court
properly exercised its discretion to review privileged emails in camera).
When, as here, the trial court has engaged in an in camera review of documents,
“its determination that the information contained therein was not material and relevant
to the case should be afforded deference on appeal.” People v. Arredondo, 226 A.D.2d
322 (1st Dep’t 1996)(upholding the trial court’s exercise of discretion in denying the
defendant’s request for disclosure of the complainant’s psychological records, some of
which had been reviewed in camera and found not to be material)(citation omitted).
Con Edison’s position on this appeal fails to respect the role of the IAS Court in
managing discovery herein and it similarly fails to recognize the deference that should
be afforded to the Court’s rulings, particularly in light of the in camera review
conducted. Given the IAS Court’s familiarity with the issues presented, it was
4825-1257-7052.1 21
perfectly appropriate for it to determine that the documents for which production was
sought were not relevant and would not lead to the discovery of admissible evidence.
As the Court’s Orders reflect, it gave serious consideration to the issues presented and
came to a well reasoned and fully supported determination. Con Edison has failed to
present a persuasive argument that deference is not due to the Court’s rulings.
Moreover, the IAS Court well knew that if production of these documents was
compelled, Con Edison’s scorched earth litigation tactics would result in its generating
a myriad of further discovery demands, deposition notices, as a result of which this
protracted proceeding would become even more protracted. The court supervising
discovery acts appropriately when it exercises case management and control over the
discovery process in this manner, particularly when it does so to avoid unnecessary
discovery about irrelevancies in a case involving a long and contentious discovery
process. GS Plasticos Limitada, 112 A.D.3d at 540.
The IAS Court’s initial pronouncement concerning why the in camera review
supported the conclusion that the Diamond Shamrock Litigation documents were not
relevant is terse (A. 38-39). There can be no question, however, that the Court
addressed the issues raised by Con Edison in an appropriate careful manner; it
directed that the documents be produced and then reviewed them before deciding
whether they were relevant. Moreover, the IAS Court took seriously Con Edison’s
concerns as advanced via its renewal motion, and reconfirmed the initial
4825-1257-7052.1 22
determination in an order that encompasses a full and persuasive discussion of the
issues presented.
First, the Court summarized the Diamond Shamrock Litigation documents and
transcripts that Con Edison presented in support of its application (A. 101-103). The
Court then discussed the applicable standards applicable to determinations as to the
admissibility of evidence of prior accidents (A. 103).
The Court explained in detail why it disagreed with Con Edison’s argument that
those standards were satisfied because the two incidents were similar. The Court
showed that the similarities were superficial and not controlling, pointing out that,
while both incidents allegedly involved excessive application of sealant,
the sealant was, at most, a contributing factor in the incidents. However, the
nature of the two accidents was not substantially the same. In Diamond
Shamrock, the conditions of the accident were a defective and leaking valve in
a unit in a refinery, which defect was then unknown, Team’s alleged
application of too much sealant to the leak and improper erection and
installation of a leak exposure unit, which allegedly contributed to causing the
nozzle of the valve to rupture, and subsequent chemical release and fire. The
mechanism of the injury there, as it concerns Team, was its failure to design the
leak enclosure unit improperly and its excessive application of sealant into the
unit which caused the nozzle to rupture, either by the pressure of the sealant
application or the sealant itself.
The incident at issue here involves a steam system overloaded by a large
amount of rain in a short time period and unable to release accumulated steam
properly due to blocked steam traps, which caused a steam pipe to burst and
explode. And, the allegations against Team are that when it made various leak
repairs on the steam system over the years, it injected too much sealant which
then migrated from the pipes into the system and eventually blocked the traps.
The mechanism of the injury as to Team is that Team’s sealant migrated rather
than stayed attached to the pipes and blocked steam traps.
4825-1257-7052.1 23
The conditions of the accident are dissimilar. A leaking and defective valve in
one case and an overloaded steam system in another; a chemical release and
fire in one case, and a burst steam pipe and explosion in the other. The
particular allegations against Team are also disparate. Consequently, Con Ed
has failed to establish that the relevant conditions are substantially the same.
(A. 103-104) [discussion of case law cited by the Court omitted]
The Court’s discussion remains operative and should be adhered to by this
Court in deciding that affirmance of the orders being appealed from is appropriate.
The Court went on to explain additional reasons why the documents were not
relevant and did not have to be produced:
Con Ed has also failed to demonstrate how the Diamond Shamrock incident
would have given Team notice of the allegations at issue here, or how Team’s
knowledge that excessive sealant application or pressure, combined with a
defective valve and improper leak unit, could cause a chemical release and fire,
would have given it notice that excessive application of sealant to pipes within
a steam system could cause the sealant to migrate into the water and block
steam traps, and, combined with a system overwhelmed by too much rain
within a short period of time, could cause a burst steam pipe and an explosion.
That the Diamond Shamrock incident may have placed Team on notice
generally of dangers associated with excessive sealant is insufficient to show
that Team had notice of the specific problem at issue here.
(A. 105-106)
Finally, the IAS Court observed that, notwithstanding Con Edison’s submission
of various documents from the Diamond Shamrock Litigation in support of its motion,
“it has not identified what particular documents it seeks from Team the Diamond
Shamrock litigation that it does not already have. Nor has it shown that it cannot
otherwise obtain or has not already obtained pertinent documents.” (A. 106) In other
4825-1257-7052.1 24
words, the IAS Court concluded that, having obtained at least some of the documents
being sought, absent a showing of relevance and need for more documents, further
rambling on this detour would be prohibited so that the case could continue to travel
expeditiously along the main road.
Con Edison’s Brief fails to rebut the IAS Court’s reasoning as set forth above.
The Court made an appropriate determination that the broad discovery sought by Con
Edison should not be permitted in view of the issues presented and Con Edison’s
having ample bases to seek to prove its case via more directly probative evidence.
Accordingly, Con Edison has not presented a sufficient basis to second-guess the
Court’s conclusions based in part on the documents reviewed in camera and after two
rounds of briefing and ample opportunity for Con Edison to present its strongest case
for obtaining access to the files.
B. It Is Proper To Preclude Burdensome Discovery
Concerning This Prior Dissimilar Incident
Notably, Con Edison initially sought production of the Diamond Shamrock
Litigation files based on its speculation that they might reflect relevant information
pertaining to the instant litigation, notwithstanding that the documents necessarily
concern a litigation that took place halfway across the country and concerned
allegedly negligent conduct by a separate team of Team employees on a completely
unrelated project as to a different device being utilized in a different system.
4825-1257-7052.1 25
Generally, the courts are loath to require production of such past evidence of
supposedly similar conduct or incidents except in very limited circumstances, such as
when the defendant may have had notice by virtue of a prior similar accident at the
same location or involving the same instrumentality. As the IAS Court concluded, the
discovery here could not be justified due to the dissimilarity of the two incidents. The
appellate courts have held frequently that evidence as to dissimilar incidents is not
germane and should not be considered. See, e.g., Gjonaj v. Otis Elevator Co., 38
A.D.3d 384 (1st Dep’t 2007)(prior elevator accident irrelevant since there was no
indication the same defect caused the accident at issue). See also the authorities cited
by the IAS Court (A. 105).
Notably, the gravamen of Con Edison’s claim against Team is not that it
defectively designed a product that caused injury, but rather that Team failed to warn
it of the dangers associated with excessive sealant (Brief p. 21). When a design defect
is at issue, discovery of prior incidents involving the defective product are generally
permitted. Herbert v. Sivaco Wire Corp., 289 A.D.2d 71, 72 (1st Dep’t 2001)
(discovery in product defect case compelled as to “substantially similar” prior
incidents involving the product as the information may be relevant to whether the
product was hazardous and notice). “Discovery of evidence of prior similar accidents,
while material in cases where a defect is alleged in the design or creation of a product
or structure, is irrelevant and inappropriate in cases such as this, where no inherent
4825-1257-7052.1 26
defect is alleged.” Daniels v. Fairfield Presidential Mgm’t Corp. 43 A.D.3d 386,
388 (2d Dep’t 2007). See also, e.g., Kolody v. Supermarkets Gen. Corp., 163 A.D.2d
276 (2d Dep’t 1990). As the IAS Court concluded, the alleged failure of the leak
exposure unit Team created for Diamond Shamrock has no bearing on Team’s alleged
conduct here, which does not involve design work by Team and concerns solely
Team’s alleged application of excessive sealant to Con Edison’s steam system.
Thus, Mendelowitz v. Xerox Corp., 169 A.D.2d 300 (1st Dep’t 1991), cited by
Con Edison (Brief p. 17), does not dictate a contrary result. There, this Court held that
an asbestos defendant was required to provide a list of other claimants who alleged
exposure to asbestos from defendant’s copying machines. Moreover, the relatively
modest burden of having to produce a list is hardly akin to the extensive production
sought by Con Edison of an entire voluminous file about an unrelated incident, in light
of the further discovery proceedings that Con Ed would inevitably pursue.
Con Edison predicates its objection to the IAS Court’s determination on the
Order’s citation to appellate decisions ruling on the admissibility of evidence (A. 104-
105), rather than to the broader standard used to determine whether material is
discoverable. That objection is not well taken in this case. The IAS Court’s detailed
discussion reflects the determination that the two incidents were so disparate that the
discovery being sought was irrelevant and would not lead to the discovery of
admissible evidence. Given the Court’s intimate familiarity with the parties’ claims
4825-1257-7052.1 27
and proofs and as to the ongoing proceedings in this case, it would only be appropriate
to depart from that determination if a compelling showing of abuse of discretion were
presented. Con Edison failed to make any such compelling showing in support of its
motions, and its appeal is likewise insufficient.
Notably, based on the rationale in the case law discussed above, in appropriate
cases such as this, the courts will preclude discovery that is necessarily a dead end.
For example, in Aaron v. Pattison, Sampson, Ginsberg Griffin, P.C., 69 A.D.3d 1084
(3d Dep’t 2010), the Appellate Division, Third Department affirmed a ruling that the
defendant law firm accused of malpractice did not have to produce documents
reflecting prior malpractice claims, disciplinary issues and the like. The plaintiff’s
demand for such “patently immaterial and unnecessary information” amounted to
“nothing more than a ‘fishing expedition’ made for the ‘illegitimate purpose’ of
‘uncovering facts supporting inefficient, conclusory allegations.’” Id. at 1085.
The same reasoning applies to Con Edison’s request to review all of the
Diamond Shamrock Litigation files. There is no basis to conclude that anything in the
files – which reflect how Team’s Texas employees’ construction of a containment
device and related work allegedly caused or contributed to a 2001 Texas accident - has
any bearing on how Team’s New York employees conducted their work applying
sealant to Con Edison’s steam system at Con Edison’s direction several years later.
Since Con Edison was obligated to demonstrate how the requested materials are
4825-1257-7052.1 28
relevant to the issues, but failed to do so, the IAS Court’s determination that
production should not be compelled should be affirmed.
It is important to note that Con Edison has not presented any persuasive reason
to compel production of the documents from this prior unrelated case despite having
obtained additional documents from the case that should have furnished a basis for
further inquiry if same could be justified. As the IAS Court recognized, Con Edison’s
rationale for wanting to review the Diamond Shamrock Litigation documents is
undermined not only by the Court’s determination that the file documents do not
contain relevant information, but also by Con Edison’s possession of documents from
court files that apparently includes the documents it claimed it needed to review (A.
106). Yet Con Edison failed to make any detailed showing in the IAS Court, and does
not do so in its Brief in this Court, as to how any information revealed by those
documents supports its hypothesis that what happened in Texas years earlier is
pertinent to its case against Team such that it has a compelling need for the review of
additional documents and follow-up discovery concerning these issues.
Con Edison has not demonstrated that the IAS Court erred or that it is entitled
to the production of still more irrelevant documents because it needs access to the
documents to make out its case against Team. Con Edison’s continued reliance on
supposition indicates strongly that it is has realized that its attempt to predicate
Team’s liability on what happened in Texas in 2001 is devoid of actual factual basis.
4825-1257-7052.1 29
Yet Con Edison persists with its motions and appeals in a seemingly calculated
attempt to increase the cost of the litigation and for in terrorem purposes, all while
ignoring the burden being imposed on the courts. Since this Court will not compel
discovery when, as here, it is “presented with nothing more than hypothetical
speculations calculated to justify a fishing expedition”, it should not hesitate to affirm.
Budano v. Gurdon, 97 A.D.3d 497, 499 (1st Dep’t 2012)(citation and internal
quotation marks omitted).
Con Edison argues further that Team should be compelled to provide other
document production that it has failed and refused to provide concerning other past
incidents allegedly involving the use of excessive sealant (Brief p. 24). This argument
cannot overcome Team’s showing that it has complied with the demands and the
Court’s orders, and that, to the extent it has not produced all of the documents that
Con Edison seeks, it has not done so because it does not have the documents. Team
has explained in detail why specific documents being sought have not been or cannot
be produced, primarily because the incidents occurred so long ago that they are no
longer extant (A. 523, 525) (as a result of which the ancient documents would likely
be irrelevant). Con Edison offers no explanation for its bald assertion that there are
documents that Team has withheld improperly. Team cannot be compelled to provide
documents not within its possession, custody or control or sanctioned for failing to
produce them.
4825-1257-7052.1 30
Critically, the IAS Court – intimately familiar with all of the discovery
proceedings – did not agree with Con Edison’s contentions that Team had wrongfully
failed to comply with outstanding production requests or court orders compelling
production. Under the circumstances, the Court should give short shrift to Con
Edison’s halfhearted effort to cast aspersions as to Team’s putative noncompliance
absent supporting facts in the record.
4825-1257-7052.1 31
II
CON EDISON HAS NOT MET ITS BURDEN
TO ESTABLISH THE BASIS FOR SPOLIATION
SANCTIONS BECAUSE THERE HAS BEEN NO
DESTRUCTION OR DISCARDING OF DOCUMENTS
Because the Diamond Shamrock Litigation documents have not been destroyed,
Con Edison has not met its burden for an award of spoliation sanctions of any stripe.
While the sanction of striking an answer or precluding proof is available for the
destruction of evidence or discovery violations in extreme cases, this Court is mindful
that public policy favors the resolution of cases on the merits. Gibbs v. St. Barnabas
Hospital, 61 A.D.3d 599 (1st Dep’t 2009). Under the common-law doctrine of
spoliation, when a party negligently loses or intentionally destroys key evidence,
thereby depriving the nonresponsible party of the ability to prove its claim, the
responsible party may be sanctioned by the striking of its pleading or other relief such
as preclusion.
The moving party must establish that (1) the party with
control over the evidence had an obligation to preserve
it at the time it was destroyed; (2) the records were
destroyed with a ‘culpable state of mind,’ which may
include ordinary negligence; and (3) the destroyed
evidence was relevant to the moving party’s claim or
defense.
Duluc v. AC & L Food Corp., 2012 NY Slip. Op. 05243, at 4 (1st Dep’t July 10, 2014)
(affirming denial of spoliation sanctions when defendant complied with demand for
preservation of evidence)(quoting and citing VOOM HD Holdings v. Echostar
4825-1257-7052.1 32
Satellite L.L.C., 93 A.D.3d 33, 45 (1st Dep’t 2012), and Ahroner v. Israel Discount
Bank, 79 A.D.3d 481 (1st Dep’t 2010)(both upholding adverse inferences based on a
party’s destruction of electronic evidence)).
“The burden is on the party requesting sanctions to make the requisite
showing.” Duluc, 2014 NY Slip. Op. at 4, citing Mohammed v. Command Sec. Corp.,
83 A.D.3d 605 (1st Dep’t), lv. denied, 17 N.Y.3d 708 (2011). The determination of
whether to entertain sanctions for spoliation of evidence is within the sound discretion
of the trial court. Duluc, 2012 NY Slip Op. at 4 (holding that court “properly exercised
its discretion in denying plaintiff’s motion for spoliation sanctions”); Fireman’s Fund
Ins. Co. v Sweeney & Harkin Carpentry & Dry Wall Corp., 78 A.D.3d 650 (2d Dep’t
2010); Barahona v Trustees of Columbia Univ. in City of N.Y., 16 A.D.3d 445 (2d
Dep’t 2005).
Spoliation sanctions should not be imposed when the conduct at issue did not
deprive the moving party of its ability to prosecute or defend the litigation. Orthotec,
LLC v. HealthpointCapital, LLC, 106 A.D.3d 472 (1st Dep’t 2013)(affirming denial of
motion to strike plaintiff’s claim); Vasquez v. Soriano, 106 A.D.3d 545 (1st Dep’t
2013)(holding that the court providently exercised its discretion in denying plaintiffs’
motion to strike the defendant’s answer despite destruction of object that allegedly
caused accident because plaintiffs could still prove their case via photographs that
accurately depicted the condition at the time of the accident).
4825-1257-7052.1 33
While sanctions for spoliation may be imposed in appropriate cases when the
party’s conduct has been negligent, there must be a viable showing of the destruction
of relevant evidence and resulting prejudice. Strong v. City of New York, 112 A.D.3d
15 (1st Dep’t 2013)(imposing spoliation sanctions based on destruction of evidence,
but refusing to preclude defendant from offering any evidence to establish its
defense). In cases of gross negligence only, prejudice may be presumed; whereas in
cases involving simple negligence the movant must show that the lost information
would have supported its position. Pegasus Aviation I, Inc. v. Varig Logistica S.A.,
2014 Slip. Op. 04047, at 13 (1st Dep’t June 5, 2014)(reversing trial court’s spoliation
sanction of an adverse inference determination when the defendants were merely
negligent and given the absence of prejudice).
This Court should affirm because Con Edison’s appeal presents no basis to
conclude that the IAS Court abused its discretion in denying the motion for spoliation
sanctions (A. 106). Con Edison’s abject failure to substantiate its patently inaccurate
and now insupportable contention that Team destroyed or discarded any evidence
mandates denial of its appeal. It is patent based on the record that Team did not
destroy or discard any of the files at issue. Con Edison has no valid basis to refute
Team’s showing that the Diamond Shamrock Litigation file maintained by the law
firm that handled that dispute still exists. Mere attacks on the credibility of New York
and Texas counsel do not suffice to make out Con Edison’s burden to show that
4825-1257-7052.1 34
spoliation actually occurred. Con Edison therefore cannot show that there was any
destruction of evidence, and thus it necessarily cannot show wilful destruction of
evidence or that Team’s conduct was carried out to frustrate Con Edison’s interests or
that Team’s handling of the documents constituted an act of negligence.
See, Lipco Electrical Corp. v. ASG Consulting Corporation, 117 A.D.3d 687,
688 (2d Dep’t 2014)(finding that the IAS Court properly denied appellants’ motion to
strike the defendants’ answer based upon spoliation of evidence since the appellants
failed to conclusively establish that certain evidence was willfully destroyed or
discarded in order to frustrate the appellants’ interest); Cuevas v. 1738 Assoc., LLC,
96 A.D.3d 637 (1st Dep’t 2012)(sanctions were properly denied when it was unclear
whether destroyed or lost videotape even depicted the plaintiff’s accident). See also,
Barahona, 16 A.D.3d at 446 (spoliation motion properly denied where movant failed
to demonstrate that the plaintiff’s loss of evidence constituted either negligent or
intentional spoliation); Wilkie v. New York City Health and Hosps. Corp., 274
A.D.2d 474 (2d Dep’t), lv. denied, 96 N.Y.2d 705 (2000)(party seeking adverse
inference charge based on spoliation must show that the evidence allegedly lost or
destroyed actually existed, that it was under the opposing party’s control, and that
there is no reasonable explanation for the failure to produce the evidence).
Here, Team was reliant on Texas counsel’s explanations as to the status of the
documents, it duly investigated and promptly set the record straight when it learned
4825-1257-7052.1 35
that the documents had not been destroyed and it obtained clarification as to the
number of boxes, almost all of which have been preserved and not discarded or
destroyed. In short, there is no currently operative factual basis to find that any
spoliation occurred.
Even assuming arguendo that Con Edison were able to convince this Court that
the Diamond Shamrock Litigation files were discoverable, or that a further in camera
review of the un-reviewed boxes stored in Texas were warranted, on remand Team
can produce what may in fact amount to the entire file. In the unlikely event that Con
Edison found anything in those files that it believes pertinent to its claims against
Team, Con Edison would have the benefit of being able to use those documents. In
sum, inasmuch as Con Edison’s ability to prosecute its claims against Team cannot
have been fatally compromised by Team’s handling of these files, Con Edison has not
been prejudiced because it has not been left without the means to prove its case. In
this regard, the critical point is that Team has not shown and cannot show that the
allegedly destroyed evidence was “central to [its] case.” Fireman’s Fund Ins. Co., 78
A.D.3d at 651. To the contrary, it has already been established to the satisfaction of
the well informed neutral judge who reviewed ten boxes of the litigation files in
dispute that the documents are irrelevant.
In sum, because Con Edison cannot prove that the alleged destruction of
evidence left it without means to prove its case, this appeal should be denied. Ashford
4825-1257-7052.1 36
v. Tannenhauser, 108 A.D.3d 735, 737 (2d Dep’t 2013)( spoliation argument held to
lack merit due when plaintiffs could not demonstrate that spoliation left them without
means to prove their case).
While Con Edison also complains about the time that has been devoted to these
issues as a result of delays in production and Team’s erroneous information that only a
few boxes of documents existed, which was subsequently corrected when many more
boxes were located, no showing of bad faith or wilful and contumacious conduct has
or can be made. Con Edison has chosen to devote undue effort to the issues pertaining
to the existence and relevance of the Diamond Shamrock Litigation files
notwithstanding the IAS Court’s determination as of June 18, 2013 that they are not
relevant. It should not be heard to seek relief based on the improper handling of this
issue by Team or its counsel when Con Edison should have given up the ghost long
ago. Most significantly, the IAS Court did not believe that Team had engaged in any
improper conduct. Because Team complied fully with the Court’s discovery orders, it
would be improper for this Court to suddenly determine that Team’s compliance was
insufficient and so woefully inadequate that it should be sanctioned in drastic fashion.
Finally, Con Edison argues that Team’s noncompliance with discovery orders
merits sanctions (Brief p. 33). But Con Edison did not appeal with respect to supposed
violations of CPLR 3126. That statute is not mentioned in its Pre-Argument
Statements or cited in its Brief. Con Edison appealed only as to the denial of sanctions
4825-1257-7052.1 37
for common law spoliation. Any argument that Team should be sanctioned for non-
compliance with CPLR 3126 is unpreserved for appellate review. 220-52 Associates v.
Edelman, 18 A.D.3d 313, 315 (1st Dep’t 2005).
Even if the issue had been preserved, the foregoing discussion shows that Con
Edison cannot possibly make the necessary showing to support striking of Team’s
Answer or other similar draconian sanctions. “[I]t is well settled that the drastic
sanction of striking a party’s pleading pursuant to CPLR 3126 for failure to comply
with a discovery order is appropriate only where the moving party conclusively
demonstrates that the non-disclosure was willful, contumacious or due to bad faith.”
McGilvery v New York City Tr. Auth., 213 A.D.2d 322, 324 (1st Dep’t 1995). See
also, Curiel v. Loews Cineplex Theaters, Inc., 68 A.D.3d 415 (1st Dep’t 2009). It is
clear that Con Edison has not made the necessary showing to support such an order.
Team has sought to comply with all orders of the IAS Court in good faith, and the IAS
Court – which is in the best position to evaluate Team’s overall conduct throughout
this lengthy discovery process – has had no cause to condemn Team. Nor has Con
Edison shown prejudice given Team’s showing that the documents were not
destroyed.
4825-1257-7052.1 38
CONCLUSION
For the foregoing reasons, respondent Team Industrial Services, Inc.
respectfully requests that this Court affirm the IAS Court’s Orders and grant it the
costs of the appeals.
Dated: New York, New York
August 6, 2014
LEWIS BRISBOIS BISGAARD & SMITH LLP
By: ______________________________________
Peter T. Shapiro, Esq.
Attorneys for Defendant-Third-Party
Defendant-Respondent Team Industrial
Services, Inc.
77 Water Street, 21st Floor
New York, New York 10005
212-232-1300
Peter.shapiro@lewisbrisbois.com
Of counsel:
Peter T. Shapiro
Darrell J. Whiteley
Daniel J. Fox
Brian Pete
/s/ Peter T. Shapiro, Esq.
4825-1257-7052.1 39
Printing Specification Statement Pursuant to 22 NYCRR §600.10(d)(1)(v)
This computer generated brief was prepared using a proportionally spaced/
typeface.
Name of typeface: Times New Roman
Point size: 14
Line spacing: Double
The total number of words in the brief, inclusive of point headings and footnotes and
exclusive of pages containing the table of contents, table of authorities, proof of
service, certificate of compliance, or any authorized addendum is 9,079.
LEWIS BRISBOIS BISGAARD & SMITH LLP
By: ______________________________________
Peter T. Shapiro, Esq.
Attorneys for Defendant-Third-Party
Defendant-Respondent Team Industrial
Services, Inc.
77 Water Street, 21st Floor
New York, New York 10005
212-232-1300
/s/ Peter T. Shapiro, Esq.