Decision Revisits State of E-Discovery Six Years After Zubulake.
At both the federal and state levels of litigation, e-discovery is an expensive process fraught with onerous obligations by the responding litigants and their attorneys. Obviously, failure to preserve, collect and store documents can harm the integrity of the judicial process. As a result, the judiciary has indicated that a broad range of remedies, including orders granting further discovery, cost-shifting (usually awards of substantial attorney’s fees and forensic document expert costs), fines, special jury instructions, evidentiary preclusion, and the entry of a default judgment/dismissal, may be in order depending on the circumstances.
Must reading for all litigators and in-house counsel is U.S. District Judge Shira A. Scheindlin’s recent decision in The Pension Comm. of the University of Montreal Pension Plan v. Banc of America Securities, LLC, Case No. 05 Civ. 9016 (SAS) (S.D.N.Y.), Opinion and Order filed January 11, 2010. District Judge Scheindlin is the author of prior groundbreaking e-discovery decisions in Zubulake. In her recent decision, District Judge Scheindlin revisits Zubulake and provides a detailed methodology for adjudication of culpability and imposing appropriate remedies for e-discovery transgressions.
Although we cannot do justice to all aspects of this decision, here is a quick summary of nuggets distilled from reading this new opinion:
- Definitely after July 2004 (when the final relevant Zubulake opinion was issued), the failure to issue a written litigation hold constitutes gross negligence because that failure is likely to result in the destruction of relevant information;
- After July 2004, the failure to collect records—either paper or electronic—from key players constitutes gross negligence or willfulness as does the destruction of email or backup tapes after the duty to preserve has attached (which arises when a party reasonably anticipates litigation);
- The innocent party in an e-discovery dispute must prove the following three elements: that the spoliating party (1) had control over the evidence and an obligation to preserve it at the time of destruction or loss; (2) acted with a culpable state of mind upon destroying or losing the evidence; and that (3) the missing evidence is relevant to the innocent party’s claim or defense;
- When the spoliating party’s conduct is sufficiently egregious to justify a court’s imposition of a presumption of relevance and prejudice, or when the spoliating party’s conduct warrants permitting the jury to make such a presumption, the burden then shifts to the spoliating party to rebut that presumption;
- A court should always impose the least harsh sanction that can provide an adequate remedy, with the selection of an appropriate remedy constituting a delicate matter that requires a great deal of time and attention by a court;
- Monetary sanctions are appropriate for punishment and for deterrence; and
- Counsel must direct employees to preserve all relevant records—both paper and electronic—after a duty to preserve attaches, as well as help create a mechanism for collecting the preserved records so that they can be searched by someone other than the employee preserving all relevant records.
Many of the defendants in this recent decision were found to have been grossly negligent with respect to e-discovery, justifying an adverse jury instruction and monetary sanctions in the form of reasonable costs, including attorney’s fees, associated with reviewing the spoliating parties’ compliance declarations, deposing the declarants, and bringing the e-discovery sanctions motions before the court.
Time lapse tea cup
Spoliation.