Spoliation 2.0 Amended

Case:  Pension Committee v. Banc of America Securities, 685 F. Supp. 2d  456 (S.D.N.Y. Jan. 15, 2010).

Topic:  E-Discovery, Spoliation and Sanctions Six Years after Zubulake  


Multiple plaintiff/investors brought an action to recover hedge fund losses. Defendant/fund managers sought sanctions for some plaintiffs' significant discovery failures.  No purposeful destruction of evidence had occurred.  However, the involved plaintiffs failed to issue timely written litigation holds. They were also careless in their collection efforts, particularly with respect to responsive electronically stored information.  Recognizing the difficulty of absolute precision in complex litigation discovery, Judge Scheindlin nonetheless held the plaintiffs here responsible for their discovery failures. The opinion gives (for the first time) specific definitions of what constitutes negligence, gross negligence and willfulness in the discovery context and applies those standards to the duty of preserving and collecting data during discovery. The opinion also explains who bears the burden of proof for establishing the relevance and probative value of evidence missing as a result of spoliation.  When the spoliation is intentional or grossly negligent, relevance and resulting prejudice is presumed and the spoliating party bears the burden of rebutting the presumption.  Only the most egregious cases should earn a dismissal sanction.  Rather, courts should use adverse inference jury instructions which may or may not be rebutted depending upon the culpability of the spoliation. In this case, plaintiffs were both negligent and grossly negligent. Ordered sanctions included motion-related fees and costs and an adverse jury instruction (with a rebuttable presumption) regarding plaintiffs' discovery failures.  As amended, the decision clarifies the scope of a party's obligation to collect records from non-key employees, changing the language regarding the consequence of inadequate collection efforts from "likely" constituting negligence to that which "could constitute negligence."

BuLITS Points

  • Well-intentioned but less than diligent parties can be sanctioned for negligent performance of their ESI discovery duties, but a determination of negligence is not mandatory when it comes to non-key employees.
  • The discovery duty to preserve and collect data includes a obligation to (at a minimum) supervise and monitor collection while using experienced personnel - and not to merely rely on the collection efforts of each custodian. 
  • Evaluating discovery misconduct involves a continuum, wherein "conduct is either acceptable or unacceptable. Once it is unacceptable the only question is how bad is the conduct."

And Remember

In order to preserve information relevant to their claims, plaintiffs may have a duty to adjust regular document and data maintenance policies even before an action is filed. Courts therefore will likely find that any data destruction that occurs on the eve of filing is grossly negligent and subject the missing information to the strict end of spoliation's sanctions.

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