Co-authored with Karen Quirk.

Since January 11, 2010, two prominent federal judges issued opinions detailing the analytical framework for deciding whether to impose sanctions for the spoliation of electronic evidence.
 
Pension Committee of Univ. of Montreal v. Banc of America Sec, LLC, et. al., 2010 WL 184312 (S.D.N.Y. Jan. 15, 2010) (Amended Order), was a decision issued by Judge Shira Scheindlin on January 11, 2010.  Judge Scheindlin’s opinion was titled “Zubulake Revisited: Six Years Later” and outlined an analytical framework for imposing severe sanctions for discovery failures.
 
Respected jurist Judge Lee Rosenthal reinforced this framework in an opinion she issued in Rimkus Consulting Group Inc. v. Cammarata, H-07-0405 (S.D. Tex. Feb. 19, 2010); however, she took a different approach than Judge Scheindlin in analyzing the culpability level necessary for imposing sanctions for preservation failures. 

In both Rimkus and Pension Committee, both courts emphasized the importance of issuing timely, written litigation holds by examining the “interplay between the duty to preserve evidence and the spoliation of evidence.”  Judge Scheindlin noted that case law makes “crystal clear that the breach of the duty to preserve” is well established and arises when a party “reasonably anticipates litigation” requiring the party to “suspend its routine document retention/destruction policy and put in place a ‘litigation hold’ to ensure the preservation of relevant documents.”  Rimkus also recognized the importance of a timely and thorough litigation hold effort, but noted that “[i]t can be difficult to draw bright-line distinctions between acceptable and unacceptable conduct in preserving information” and reiterated that the relevant standard is reasonableness which “in turn depends on whether what was done – or not done – was proportional to that case and consistent with clearly established applicable standards.” 

In both decisions, the court analyzed the evidence presented by the movant for sanctions to determine if the spoliating party’s level of culpability was simply negligent, grossly negligent or willful.  In Pension Committee, the court determined that the spoliating party’s actions in failing to timely institute written litigation holds, failing to execute a comprehensive search for documents and/or failing to sufficiently monitor their employee’s document collection were grossly negligent.  In Rimkus Consulting, the court found there was sufficient evidence for a reasonable jury to find that the spoliating party willfully destroyed electronic evidence after the duty to preserve arose.  The court determined that the spoliating party acted with bad faith throughout the discovery process.  

While both courts agreed that culpability and prejudice should be analyzed to determine if severe sanctions should be awarded, the two courts analyzed those measurements differently to make their determinations. Judge Scheindlin determined that either grossly negligent or willful behavior was enough to allow severe sanctions in the Second Circuit.  In contrast, Judge Rosenthal required a showing of bad faith before imposing severe sanctions.  This “bad faith” standard is consistent with federal court decisions in the Seventh, Eighth, Tenth, Eleventh and D.C. Circuits which also appear to require bad faith rather than negligence.  Judge Rosenthal acknowledged that the First, Fourth, and Ninth Circuits do not require bad faith to impose sanctions if there is severe prejudice, although she noted that these cases often emphasize the presence of bad faith.  And, in the Third Circuit, courts “balance the degree of fault and prejudice” to decide whether to impose severe sanctions. 

The courts differed in the adverse inference jury instruction that each issued as a penalty for the spoliation of evidence.  In Pension Committee, Judge Scheindlin instructed the jury that the plaintiffs were grossly negligent in failing to preserve evidence after the duty to preserve arose, and, therefore, informed the jury that they could presume that such lost evidence was relevant and would have been favorable to the innocent party.  In comparison, Judge Rosenthal’s instruction did not instruct the jury that the defendants engaged in intentional misconduct.  Instead, she asked the jury to decide whether the defendants intentionally deleted emails and attachments to prevent their use in litigation and, if the jury found such misconduct, she instructed the jury to decide whether to infer that the lost information would have been unfavorable to the defendants.  

What the two decisions reflect is that the law in this area continues to develop and, as Judge Scheindlin noted that there is no one test for determining whether to award sanctions, as it is an “inherently subjective” and “fact intensive” decision that must be based on judicial experience.

About John Rosenthal

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