By Katie D. Bell

In The Pension Committee of the University of Montreal Pension Plan, et al. v. Banc of America Securities LLC, et al., 685 F.Supp.2d 456 (S.D.N.Y. 2010), Judge Scheindlin—author of the renowned Zubulake decisions—further develops the boundaries of discovery duties in a lengthy opinion. Although the opinion does not require parties to meet a standard of perfection during discovery, the opinion serves as an important guide that offers concrete rules and potentially burdensome standards that attorneys should heed to avoid sanction.

Writing systematically, Scheindlin initially frames the fundamental concepts underlying the nature and scope of a party’s duty to preserve, collect, review, and produce requested records during discovery:

The first [critical issue] is plaintiffs’ level of culpability-that is, was their conduct of discovery acceptable or was it negligent, grossly negligent, or willful. The second is the interplay between the duty to preserve evidence and the spoliation of evidence. The third is which party should bear the burden of proving that evidence has been lost or destroyed and the consequences resulting from that loss. And the fourth is the appropriate remedy for the harm caused by the spoliation. (1)

Following this analytical framework, Scheindlin first explores the meaning of negligence, gross negligence, and willfulness in the discovery context. Beginning with the first step of discovery, Scheindlin characterizes a failure to preserve relevant evidence as “surely negligent” and “may be grossly negligent or willful.” (2)  Similarly, sloppy collection and review during the next steps of the discovery process also constitute negligence, and possibly gross negligence or willfulness. For example, Scheindlin indicates that the failure to collect records from “key players” is grossly negligent or willful—just like destroying email or backup tapes after the duty to preserve has attached. (3)

Further, Scheindlin suggests that failing to collect relevant records from all employees involved in anticipated litigation is mere negligence. Likewise, a failure to take “all appropriate measures to preserve [electronically stored information]” is negligent. (4)  The court also 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.” (5)  Indeed, this failure may be enough to warrant an adverse inference by itself. (6) 

Second, Scheindlin discusses the relationship between the duty to preserve and spoliation. Noting the court’s “inherent power” to protect the “integrity of the judicial process,” the judge warns parties and their attorneys of the possibility of imposing sanctions for breaches of the duty to preserve evidence after litigation has become reasonably foreseeable. (7)  Particularly, Scheindlin suggests that a plaintiff’s duty to preserve is triggered before litigation begins because plaintiffs generally “control the timing of litigation” and therefore reasonably anticipate its commencement. (8) 

Next, Scheindlin’s opinion examines burdens of proof for determining what should be done when relevant documents are no longer available as a result of spoliation. Specifically, who should bear the burden of establishing the relevance of the lost evidence, as well as the prejudice the loss has caused? As Judge Scheindlin explains, the degree of the burden of proof is dependent upon the severity of the sanction:

For less severe sanctions-such as fines and cost-shifting-the inquiry focuses more on the conduct of the spoliating party than on whether documents were lost, and if so, whether those documents were relevant and resulted in prejudice to the innocent party…[F]or more severe sanctions-such as dismissal, preclusion, or the imposition of an adverse inference-the court must consider, in addition to the conduct of the spoliating party, whether any missing evidence was relevant and whether the innocent party has suffered prejudice as a result of the loss of evidence. (9) 

Particularly, Scheindlin suggests that it is insufficient for an innocent party to demonstrate that lost or destroyed evidence would have been merely responsive to a discovery request. Rather, the innocent party must show that the lost evidence would have been useful in proving its claims or defenses and that it is prejudiced without the evidence. Despite this discussion about proving sanctionable misconduct, Scheindlin cautions against litigation becoming a “gotcha game.” (10)

Notably, in her opinion, Scheindlin employs a burden-shifting test:

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. (11)

Finally, Scheindlin discusses the appropriate remedies for spoliation, implementing the Second Circuit’s three-part test. First, appropriate sanctions should deter the parties from engaging in spoliation. Second, they should shift the risk of an error in judgment to the party who wrongfully created the risk. Third, they should restore the innocent party to the same position it would have enjoyed absent the prejudicial destruction or loss of evidence by the spoliating party. Additionally, the judge recognizes that a court should impose the least harsh sanction that can provide an adequate remedy. Thus, sanctions that terminate the action—like dismissal—are only appropriate when a party has engaged in egregious behavior, like perjury, evidence tampering, or intentional destruction of evidence by burning, shredding, or hard drive wiping. Because the plaintiffs in this case only engaged in negligent behavior, draconian sanctions were not necessary.

Throughout the opinion, Judge Scheindlin additionally offers useful tips and examples regarding specific discovery issues. For instance, the failure to preserve documents in the possession, custody, or control of former employees supports a determination of gross negligence. Furthermore, the opinion provides guidance on the issue of the preservation of backup tapes. Scheindlin dismisses the existence of a duty to preserve backup tapes, unless, of course, the tapes are the only source of relevant information.

Entitled “‘Zubulake’ Revisited: Six Years Later,” the Pension Committee decision will assuredly serve as an often-used guide to assist attorneys in wrestling with the duties and challenges of discovery—especially in the quickly and constantly evolving domain of electronic discovery.
 

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(1) Pension Committee, 685 F.Supp.2d at 463.
(2) Id. at 464.
(3) Id. at 465.
(4) Id.
(5)  Id. at 464–465.
(6) But see Surowiec v. Capital Title Agency, Inc., 2011 WL 1671925, at *7 (D.Ariz. 2011)(disagreeing with Pension Committee, holding that “[p]er se rules are too inflexible for this factually complex area of the law where a wide variety of circumstances may lead to spoliation accusations”). See also Rimkus Consulting Group, Inc. v. Cammarata, 688 F.Supp.2d 598, 616–17 (S.D.Tex.2010)(refusing to follow Pension Committee’s approach of presuming relevance and prejudice when the spoliating party is grossly negligent); Steuben Foods, Inc. v. Country Gourmet Foods, LLC, 2011 WL 1549450, at *5 (W.D.N.Y. 2011)(holding that the failure to issue a written litigation hold is not a per se ground to presume or infer loss of relevant documents).
(7) Pension Committee, 685 F.Supp.2d at 466.
(8) Id.
(9) Id. at 467.
(10) Id. at 468.
(11)  Id. at 468–469.