Several years ago, Judge Shira Scheindlin of the Southern District of New York issued a series of orders in the case of Zubulake v. UBS Warburg LLC, No. 02-civ-1243(SAS) (S.D.N.Y.) that greatly impacted electronic discovery practices for litigants nationwide. Last month, in a federal securities fraud case against several hedge fund administrators, Judge Scheindlin issued another opinion that has already begun to impact electronic discovery practices: Pension Committee of the Univ. of Montreal Pension Plan v. Banc of America Sec., LLC, Case No. 05-civ-9016(SAS), Am. Order, 2010 WL 184312 (S.D.N.Y. Jan. 15, 2010).

The opinion, which Judge Scheindlin titled “Zubulake Revisited: Six Years Later,” explores the necessary steps that litigants and counsel must take “to ensure that relevant records are preserved when litigation is reasonably anticipated, and that such records are collected, reviewed, and produced to the opposing party.” Id. at *1. Pension explores the spoliating party’s culpability in the context of discovery misconduct and the effects of each level of culpability on the penalty and remedy for any resulting harm to the non-spoliating (or “innocent”) party.

At issue in Pension was whether 13 of the 96 investor-plaintiffs had complied with their obligations to preserve, collect, review, and produce records. The court ultimately found that 6 of these 13 plaintiffs were grossly negligent and that the remaining 7 were merely negligent. The court emphasized the inherent subjectivity of awarding discovery sanctions and noted the case-by-case nature of such a ruling. The following discussion contains highlights of the lengthy and very informative opinion.

The duty to preserve records attaches “when a party reasonably anticipates litigation.” Id. at *4. According to Judge Scheindlin, the following failures by a litigant support a finding of “gross negligence” once the duty to preserve has attached:

  1. to issue a written litigation hold;
  2. to identify all of the key players and to ensure that their electronic and paper records are preserved;
  3. 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
  4. to preserve backup tapes when they are the sole source of relevant information or when they relate to key players, if the relevant information is not obtainable from readily accessible sources.

If the conduct is negligent, then the sanctions likely will be less harsh, such as further discovery, cost-shifting, or fines. However, if the conduct is grossly negligent or willful, then the court may impose a special jury instruction that permits a jury to hear and consider evidence regarding the spoliation of evidence and to draw an adverse inference in favor of the innocent (non-spoliating) party.

Although the order is not binding on jurisdictions outside of the Southern District of New York, it is persuasive and provides practical guidance.