INSIGHTS: Articles

Failure to Issue a Litigation Hold is not Negligence Per Se

The U.S. Second Court of Appeals in Chin v. Port Authority of New York and New Jersey, 2012 U.S. App. (2d Cir. July 10, 2012) has recently held that the failure to institute a litigation hold will not establish per se gross negligence giving rise to sanctions for spoliation of evidence.

This Chin court decision is significant because it disagrees with the heavily cited Judge Shira Scheindlin who in 2010 held 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."  Pension Committee v. Bank of America Securities, 645 F. Supp. 2d 456 (S.D.N.Y. 2010).  Judge Scheindlin is widely recognized in the electronically stored information management and electronic discovery fields having co-authored books on the subject and the landmark e-discovery sanctions decision in Zubulake v. UBS Warburg.

The Plaintiffs in Chin v. Port Authority, an employment discrimination case, argued that the lower district court should have sanctioned the defendant Port Authority with an adverse inference instruction due to its destroying various file folders that related directly to the events surrounding Mr. Chin's non-promotion and resulting discrimination action, and that had a litigation hold been issued, such destruction of evidence would have been avoided. 

The court rejected the idea that the failure to issue a litigation hold established negligence per se.  It held, 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 . . . we have repeatedly held that a case-by-case approach to the failure to produce relevant evidence, at the discretion of the district court, is appropriate.”

The court found that there was ample evidence regarding the plaintiff's promotion qualifications and that the destroyed files played a "limited role" in ascertaining the promotion process.  Therefore, the court concluded that, under these circumstances, the lower court was correct in not giving an adverse inference instruction.

The defendant  in Chin v. Port Authority was able to avoid the adverse inference instruction, however, it is still very important to work with in-house or ESI-Counsel when litigation is on the horizon and issue a litigation hold to preserve evidence and avoid this type of "E-Trouble" all together.