(January 2010, eDiscoverings)
In The Pension Committee of the University of Montreal Pension Plan, et al. v. Banc of America Securities LLC, et al.
, No. 05 Civ. 9016 (SAS), 2010 WL 184312 (S.D.N.Y. Jan. 15, 2010), Judge Scheindlin revisits the issue of spoliation in a lengthy opinion that is worth reading. It provides a cautionary tale and a good summary of the state of the law, at least in the Southern District of New York, and offers some noteworthy points.
First, the issue of spoliation goes both ways. In this case, the plaintiffs were the spoliators and the court did not hesitate to sanction them, including ordering an adverse inference against the plaintiffs that had engaged in grossly negligent conduct. The court also noted that a plaintiff’s duty to preserve is usually triggered before litigation commences because the plaintiff controls the timing of the suit.
Second, the court held that the “failure to issue a written
litigation hold constitutes gross negligence because that failure is likely to result in the destruction of relevant information.” Id.
at *3. Given that in the Second Circuit, relevance and prejudice may be presumed when a spoliating party acts in bad faith or in a grossly negligent manner, the failure to issue a written litigation hold notice may be enough to warrant an adverse inference unless the spoliating party can rebut the presumption.
Third, the court reiterated the importance of preserving records of former employees that are in a party’s possession, custody or control. The court held that the failure to preserve such documents also supports a finding of gross negligence. Id.
Fourth, the court, in its January 15, 2009 amendment to its original decision, provided additional guidance on the issue of the preservation of backup tapes. Significantly, the court made clear that there is no duty to preserve backup tapes unless the tapes are the sole source of relevant information for the key players and the information is not obtainable from readily accessible sources. As the court explained in a new footnote added to the opinion, “I am not requiring that all
backup tapes must be preserved. Rather, if such tapes are the sole
source of relevant information (e.g.
, the active files of key players are no longer available), then such backup tapes should be segregated and preserved. When accessible data satisfies the requirement to search for and produce relevant information, there is no need to save or search backup tapes.” Id.
at *12 n.99.
Lastly, the opinion is a good reminder of what to do when you make a mistake on document preservation – be open and frank with the court and your adversary. Consistent with prior spoliation decisions that have awarded more severe sanctions, the court characterized the declarations submitted by plaintiffs as “at best – lack[ing] attention to detail, or -- at worst -- . . . intentionally vague in an attempt to mislead the Citco Defendants and the Court." Id.
Please contact David Lender
at (212) 310-8153 or if you would like to discuss this case or any other electronic discovery issues further.