2014: Winter Issue

Home – 2nd Circuit: Failure to Issue Hold Notice by Itself Not Enough for Discovery Sanctions

2nd Circuit: Failure to Issue Hold Notice by Itself Not Enough for Discovery Sanctions

The U.S. Second Circuit Court of Appeals has rejected the notion that a failure to institute a litigation hold constitutes the kind of per se gross negligence that warrants sanctions for evidence spoliation.  


By doing this, the court was clear in disagreeing with an often-cited 2010 decision by U.S. Judge Shira Scheindlin-a widely recognized thought leader in the management of electronic records in litigation. She is the author of the first casebook on e-discovery, co-author of a book on the subject, and author of the landmark decision in Zubulake v. UBS Warburg.  


The Second Circuit made its ruling in an employment discrimination case called Chin v. Port Authority of New York and New Jersey. In this case, the plaintiffs argued that the district court should have given an adverse inference instruction because the Port Authority destroyed folders pertaining to employee promotions, the issue in the case. Destroying evidence is gross negligence per se, Chin argued. The Port Authority said that while it had an obligation to preserve the folders, the district judge was right in not granting an adverse inference instruction.  


"We reject the notion that a failure to institute a 'litigation hold' constitutes gross negligence per seContra Pension Comm. of Univ. of Montreal Pension Plan v. Bank of Am. Secs., LLC, 685 F. Supp. 2d 456, 464-65 (S.D.N.Y. 2010).  Rather, we agree that 'the better approach is to consider [the failure to adopt good preservation practices] as one factor' in the determination of whether discovery sanctions should issue. . .  ," the panel said.


The panel pointed to the district court's determination that a finding of gross negligence "merely permits, rather than requires" an adverse inference instruction.


The Second Circuit held that even if it were to assume there was gross negligence in destroying relevant documents, it repeated rulings it made previously favoring a case-by-case approach to failure to produce relevant evidence. Given the "limited role" of the destroyed files and other ample evidence on the plaintiffs' qualifications, the Second Circuit said the lower court was correct and that an adverse inference instruction was not appropriate.


Fulbright & Jaworski's David Kessler wrote that the decision "does not change the best practice of issuing written litigation holds in most cases."  The Second Circuit focused on "the reasonableness of a party's conduct taken as a whole and rejects the premise that any one step is dispositive of a responding party's culpability if relevant data is lost."


For more information about LexisNexis products and solutions, connect with us through our corporate site.