Lender, David J.
(January 18, 2011, eDiscoverings)
Orbit One Communs., Inc. v. Numerex Corp., 2010 WL 4615547 (S.D.N.Y. Oct. 26, 2010) (Francis, J.), provides yet another important decision on issues related to preservation and spoliation from the Southern District of New York.
In that case, the court denied a motion for sanctions, despite Orbit One’s failure to adopt appropriate preservation procedures, including failing to impose any formal litigation hold at the start of the litigation, and placing primary responsibility for preservation with the individual with the greatest incentive to destroy evidence. The court held that “[n]o matter how inadequate a party’s efforts at preservation may be . . . sanctions are not warranted unless there is proof that some information of significance has been lost.”
Id. at *1. This is an important holding because certain courts have suggested that some sanction is warranted so long as information is lost. As the court explained, however, “[i]t is difficult to see why a party who destroys information purposefully or is grossly negligent should be sanctioned where there has been no showing that the information was at least minimally relevant.”
Id. at *11.
Second, the court rejected the standard set forth by Judge Scheindlin in
Pension Committee of the University of Montreal Pension Plan v. Banc of America Securities, LLC, 685 F. Supp. 2d 456 (S.D.N.Y. 2010), that the failure to issue a written litigation hold constitutes gross negligence. Instead, the court made clear that, “depending on the circumstances,” the failure to issue a hold “does not necessarily constitute negligence, and certainly does not warrant sanctions if no relevant information is lost,” and “under some circumstances, a formal litigation hold may not be necessary at all.” 2010 WL 4615547, at *11. This too is an important holding because, depending on the scope or frequency of litigation faced by a company, oral directives may be a better approach to ensuring that key information is preserved.
Unfortunately, the decision also contains some unhelpful guidance regarding the scope of preservation. In one of the key cases in 2010 --
Rimkus Consulting Group, Inc. v. Cammarata, 688 F. Supp.2d 598, 613 (S.D. Tex. 2010) -- a Texas district court held that the scope of preservation should be guided by principles of “reasonableness and proportionality.” Courts have been looking more and more at reasonableness and proportionality as two means to limit the burden and expense of electronic discovery and to ensure that the scope of discovery is proportional to what is at stake in the litigation. The
Rimkus decision was welcome news since it extended these principles to preservation as well. The
Orbit One court, however, rejected the
Rimkus standard as “too amorphous” and held that, “[u]ntil a more precise definition is created by rule, a party is well-advised to ‘retain all relevant documents (but not multiple identical copies) in existence at the time the duty to preserve attaches.’”
Id. at *6. In perhaps a silver lining, the court noted that courts still should consider reasonableness and proportionality in evaluating the sufficiency of a party’s preservation efforts after the fact.
Id. at *6 n.10.
Please contact
David Lender at (212) 310-8153 or if you would like to discuss this case or any other electronic discovery issues.