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Ballard Spahr LLP: Failure To Issue Litigation Hold Is Not Necessarily Gross Negligence, 2nd Circuit Holds

By Philip N. Yannella and Christopher Corsi

In a decision that will surprise some, the U. S. Court of Appeals for the Second Circuit recently held in Chin v. Port Authority [enhanced version available to subscribers] that the failure to issue a litigation hold is not gross negligence per se. This decision runs directly counter to Judge Shira A. Scheindlin's controversial ruling in Pension Committee Of Univ. of Montreal Pension Plan v. Banc of Am. Secs., LLC, [enhanced version] that "the failure to issue a written litigation hold constitutes gross negligence because that failure is likely to result in the destruction of relevant information."

The Second Circuit instead opted for a balanced approach toward sanctions, holding that the failure to issue a litigation hold was only "one factor in the determination of whether discovery sanctions should issue."

In Chin, seven Port Authority of New York and New Jersey police officers of Asian descent brought a claim under Title VII of the Civil Rights Act of 1964, alleging racial discrimination by the Port Authority in its promotion decisions. After discovering that the Port Authority had destroyed certain folders used during the promotion decision process, the plaintiffs brought a motion for sanctions.

The promotion folders at issue were destroyed after the Port Authority received notice of the plaintiffs' Equal Employment Opportunity Commission charge. However, the district court held that the destruction of the promotion folders, while negligent, was not gross negligence because the plaintiffs had other similar sources of evidence at their disposal. Accordingly, the district court denied the plaintiffs' request for an adverse instruction from the court.

The plaintiffs appealed the decision to the Second Circuit, arguing that the destruction of the promotion folders constituted gross negligence, rather than mere simple negligence, because the Port Authority had failed to issue a written legal hold. In addition to rejecting that argument, the Second Circuit clarified that "a finding of gross negligence merely permits, rather than requires, a district court to give an adverse inference instruction." The Second Circuit espoused a "case-by-case approach to the failure to produce relevant evidence" and left that determination to the sound discretion of the district court.

Chin joins a line of cases from other circuits that have directly or indirectly criticized Pension Committee's categorical and, as some have argued, harsh approach toward the issuance of written legal holds. But Chin should not be understood to abrogate or lessen the need for issuing written litigation holds once a duty to preserve has attached. At a minimum, the failure to issue a litigation hold continues to be a factor for district courts in the Second Circuit to consider when deciding discovery sanctions. And it is likely, notwithstanding Chin, that many district courts will take the view that the failure to issue a written legal hold is a critical lapse that warrants the imposition of sanctions.

For more information on the Chin decision or guidelines for issuing written litigation holds, please contact Philip N. Yannella at 215.864.8180 or, or Christopher Corsi at 856.761.3455 or

Copyright © 2012 by Ballard Spahr LLP.
(No claim to original U.S. government material.)

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