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Scheindlin on Litigation Holds
Solves Sanctions But Not Economical Discovery
Judge Shira Scheindlin from the Southern District of New York rose to prominence with her five decisions in Zubulake v UBS Warburg during 2003 and 2004. Two of those decisions involved litigation holds and sanctions for evidence spoliation where Judge Scheindlin articulated three obligations for preserving parties.
First, counsel must issue a litigation hold at the outset of litigation or whenever litigation is reasonably anticipated.
Second, counsel must communicate directly with key players in the litigation regarding their preservation duties.
Third, counsel should instruct all employees to produce electronic versions of their relevant active files as well as ensure that all relevant backup media are preserved and secured in a safe place. In addition, counsel must take affirmative steps to monitor compliance so that all sources of discoverable information are identified and searched.
Six years after Zubulake, Judge Scheindlin pens another lengthy opinion in The Pension Committee of the University of Montreal Pension Plan v Banc of America Securities, LLC, et al, 2010 WL 184312 (Jan 2010). In this case, she examines the entire litigation hold and evidence spoliation problem from duty inception to remedy assessment and jury instruction.
While the decision repeats much of Zubulake, it dives deeper into differentiating acts of negligence from gross negligence and their rebuttable presumptions when assessing spoliation remedies.
In the process she improves the criteria articulated in Zubulake supporting a finding of gross negligence.
1) Failure to issue timely a written litigation hold instructing preservation of all relevant paper and electronic documents and identify the mechanism for collecting records for searching by someone other than the employee and supervised by counsel.
2) Failure to identify key players and ensure that their paper and electronic records are preserved.
3) Failure to cease deletion of e-mail or preserve the records of former employees.
4) Failure to preserve backup tapes when they are the sole source of relevant information or when they relate to key players if not obtainable from readily accessible sources.
While Judge Scheindlin provides useful sanctions guidance, the decision will almost assuredly promote continued wasteful discovery and motion practice for several reasons.
The first is that her guidance on litigation holds is a minimalist approach to evidence collection and preservation without consideration of its consequence on the overall litigation cost equation.
For example, if the thirteen offending Plaintiffs in this motion had used media based preservation efforts, such as hard drive imaging, they could have returned to those images when questions about the adequacy of the collection and production process surfaced.
After all, once the media is preserved any concerns related to the initial search and harvesting can be revisited for another bite at the apple.
The same concept applies to the backup tapes. Yet Judge Scheindlin goes to great lengths to discourage backup tape preservation unless they are the sole source of relevant information. But, how can one know for sure without examining them?
While backup tapes may contain highly redundant data the chance that they contain only duplicative data found elsewhere is highly remote. After all their very existence along with the cycle in which they are used is premised on the belief that there is something different within the data population worthy of protection.
Furthermore, preservation of a backup tape can be accomplished by simply taking possession of it. So, if it meets the general criteria of applicable time periods and relevant media, why be so exclusive?
In fact, preservation is actually economical. It is the analysis that is expensive. So, why not preserve broadly and produce narrowly?
In the decision, Judge Scheindlin recognizes that spoliation motions are expensive and distract from the real issues of the case. Yet, she fails to advocate a media based preservation approach.
If simply not reducing a litigation hold instruction to writing supports a finding of gross negligence, why not make the failure to perform a media based preservation a basis for gross negligence? Is she just being penny wise and pound foolish?
Judge Scheindlin even explains that the courts must protect the integrity of the judicial process in order to retain confidence that the process works to uncover the truth because, “[a]s soon as the process falters ... the people are then justified in abandoning support for the system.”
What truth will be uncovered if the boundaries have wide open escape routes for evil doers? How might the outcome of this motion have been different if the Plaintiffs had performed more intelligent search and collection efforts on media that had already been sanitized?
Without media based preservation efforts the bad guy is free to destroy evidence. After all by the time the parties realize that something is missing the data will likely be unrecoverable as will the forensic artifacts evidencing the spoliation effort. At that point, it is just guesswork as to whether anything meaningful was lost, a rebuttable presumption.
In the end there are likely several lessons to be learned from this decision. First, the failure of a party to perform media based preservation should trigger closer scrutiny.
Second, the failure of a party to use knowledgeable personnel, perhaps even experts, in performing preservations and collections should trigger closer scrutiny.
Third, Judge Scheindlin has set the bar low with plenty of cover for those doing just what she admonished—not taking their duty seriously.
Finally, if the goal is to eliminate spoliation and make discovery and litigation more economical one should focus on preserving the media. Then use the Rule 26(f) conference to present the preservation inventory and agree upon a discovery protocol tempered with appropriate cost versus benefit analyses.
Such an approach may not eliminate production inadequacies that could be the subject of monetary sanctions but it would eliminate the chance for spoliation sanctions for the media that was preserved.