In Zubulake v. UBS Warburg, LLC, 229 F.R.D. 422 (S.D.N.Y. 2004), the Southern District of New York set certain standards for e-discovery. These standards have become the standards for federal litigation across the U.S. On January 15, 2010, the Southern District of New York revisited Zublake, in Pension Committee of the University of Montreal Pension Plan v. Banc of America Securities, LLC, No. 05 Civ. 9016 (SAS), 2010 WL 184312 (S.D.N.Y. Jan. 15, 2010).
In Pension Committee, the Court reemphasized the standards previously set, and cautioned litigants to view them as “guidance” that should not be ignored. The consequences of ignoring the “guidance”, and failure to implement certain standards range from monetary sanctions for negligent failure or case dismissal for willful/bad faith failures. In between negligent and willful/bad faith, is of course, gross negligence for failing to implement certain discovery standards.
The Court provided several examples of discovery “failures” that constitute gross negligence, namely:
1. Failure to issue a written litigation hold;
2. Failure to identify the “key players” and ensure their electronic and paper records are preserved;
3. Failure to cease deletion of e-mail or preservation of records of former employees in a party’s control; and
4. Failure to preserve backup tapes of “key players” or other employees if that is the sole source of that employees’ records.
The appropriate consequences for grossly negligent failures range from mandatory to permissive adverse inference jury charges.
In providing some specific examples of gross negligence and the consequential sanctions, the Pension Committee court warns those that attempt to permit employees to engage in self-collection/preservation (without attorney guidance), or to limit the number of employees involved. According to the decision, the only way to ensure compliance with the Pension Committee standards is for retained counsel to meet with “key players” early on to discuss preservation, identify other employees who may have necessary records (however incidental they may seem), and issue/implement a litigation hold to those individuals.
If you have any questions about this article or ESI, please contact Bob Cosgrove. Special thanks to Cheryl Fuchs for her contributions to this post.
http://ralphlosey.files.wordpress.com/2010/01/05cv9016-january-15-2010-amended-opinion.pdf