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Article of Interest

ESI Preservation and Collection in the wake of Pension Committee v. Banc of America
By: Jennifer Butler Wells

Judge Shira A. Scheindlin of the Southern District of New York, author of the Zubulake opinions, recently released the opinion in Pension Committee v. Banc of America. The opinion, subtitled “Zubulake Revisited: Six Years Later,” seeks to clarify the standards established in the Zubulake opinions.

The opinion begins with definitions of negligence, gross negligence, and willfulness, and applies them in the discovery context, giving examples of what conduct may constitute which level of culpability when considering lost or destroyed evidence.

The court notes that the first step in the discovery process is preserving relevant information. The duty to preserve arises when a party reasonably anticipates litigation. Once a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a litigation hold to ensure the preservation of relevant documents. Note that this means that a plaintiff’s duty is more often triggered before litigation commences.

A failure to preserve evidence resulting in the loss or destruction of relevant information is at least negligent, and, depending on the circumstances, may be grossly negligent or willful. For example, (as should be clear) the intentional destruction of relevant records, either paper or electronic, after the duty to preserve has attached, is willful. But, what might not be so clear is that after the Zubulake opinions were issued, the court considers the failure to issue a written litigation hold to constitute gross negligence because that failure is likely to result in the destruction of relevant information.

Collection and review are the next steps in the discovery process. The court again provides relevant examples. The failure to collect records, either paper or electronic, from key players constitutes gross negligence or willfulness as does the destruction of email or certain backup tapes after the duty to preserve has attached. On the other hand, the failure to obtain records from all employees, as opposed to key players, likely constitutes mere negligence. Additionally, the failure to take all appropriate measures to preserve ESI likely falls in the negligence category. The court notes that recent cases have also addressed the failure to collect information from the files of former employees that remain in a party’s possession, custody, or control after the duty to preserve has attached (gross negligence) or the failure to assess the accuracy and validity of selected search terms (negligence).

The court reviewed the list of potential remedies for spoliation, from least to most harsh: further discovery, cost-shifting, fines, special jury instructions, preclusion, and the entry of default judgment or dismissal.

In this case, the court determined that an adverse inference instruction and monetary sanctions were appropriate. Although the court stated that this case does not present any egregious examples of litigants purposefully destroying evidence, it was a case where the plaintiffs failed to timely institute written litigation holds and engaged in careless and indifferent collection efforts after the duty to preserve arose. Thus, the court found that there could be little doubt that some documents were lost or destroyed.

Although the court does not draw any bright line rules, noting that whether to award sanctions is an inherently subjective and fact-intensive endeavor, the court does point out that after a discovery duty is well established, the failure to adhere to contemporary standards can be considered gross negligence. Thus, after Zubulake counsel should be aware that the failure to do the following supports a finding of gross negligence, when the duty to preserve has attached: to issue a written litigation hold; to identify all of the key players and to ensure that their electronic and paper records are preserved; to cease the deletion of email or to preserve the records of former employees that are in a party’s possession, custody, or control; and to preserve backup tapes when they are the sole source of relevant information or when they relate to key players, if the relevant information maintained by those players is not obtainable from readily available sources.

Pension Comm. of the Univ. of Montreal Pension Plan v. Banc of Am. Sec., LLC, 685F. Supp. 2d 456 (S.D.N.Y., 2010) (internal citations omitted).

Ms. Wells is an associate in the Business Litigation Section of Haynes and Boone, LLP. The opinions expressed here do not reflect the opinions of Haynes and Boone or its clients.