It is not very often a Federal Judge will subtitle her written order. Judge Shira Scheindlin in Pension Comm. of Univ. of Montreal Pension Plan v. Banc of America Sec., LLC, 2010 WL 184312 (S.D.N.Y. Jan. 15, 2010) rightly subtitled her order granting sanctions: “Zubulake Revisited: Six Years Later.” Zubulake, a case with a series of 5 written opinions – the last of which was decided in July of 2004 – were the seminal decisions in e-discovery that are widely cited authority in discovery disputes. Zubulake v. UBS Warburg LLC (“Zubulake V”), 229 F.R.D. 422 (S.D.N.Y. 2004).
The Zubulake series helped inform the 2006 Amendments to the Federal Rules of Civil Procedure relating to electronically stored information (known as ESI to e-discovery practitioners or “data” to the rest of the world). Because of Zubulake, e-discovery practitioners have had a watchful eye on Judge Scheindlin ever since.
Judge Scheindlin wrote the book on e-discovery. Literally. She wrote the book entitled: Electronic Discovery and Digital Evidence: Cases and Materials (2009), in conjunction with The Sedona Conference®. Incidentally, pages 147 to 149 of the book are cited as a reference in footnote 67 of the Pension opinion relating to litigation holds. It is no wonder that this opinion has caused a stir in the blogosphere in the last few weeks.
Maybe it was Judge Scheindlin and her two law clerks’ “close to three hundred hours resolving [the] motion” in this case, (at a measly blended hourly rate of $30 no less), that made her dub the order “Zubulake Revisited.” (*7 n. 56). But if Pension, originally issued on January 11, and amended for clarification on January 15, is supposed to be on par with Zubulake, litigants and counsel should stand at attention and take heed.
It’s all about the facts
The 88-page opinion focuses on conduct in discovery. Because of the plaintiffs’ conduct in this case, “there can be little doubt that some documents were lost or destroyed.” (*2). Judge Scheindlin discusses “how to define negligence, gross negligence, and willfulness in the discovery context and what conduct falls in each of these categories.” (*2). She explains that “[c]ourts cannot and do not expect that any party can meet a standard of perfection.” (*1). “Conduct is either acceptable or unacceptable.” (*2). But, that “[t]he standard of acceptable conduct is determined through experience.” (*3). Who’s experience? The court’s.
The court makes “a judgment call” by reviewing “the conduct through the backward lens known as hindsight.” (*2). In determining sanctions, the court uses “ ‘a gut reaction’ based on years of experience as to whether a litigant has complied with its discovery obligations and how hard it worked to comply.” (*7). So, with all this subjectivity, what is a litigant to do? Judge Scheindlin is clear that it is not clear. There is no “definitive list” of examples of acceptable conduct. “Each case will turn on its own facts and the varieties of efforts and failures is infinite.” (*3). So, ultimately, a litigant’s “failure to conform to this standard is negligent even if it results from a pure heart and an empty head.” (*3).
The Continuum of Fault
So how do we help our clients avoid the “pure heart” and “empty head” predicament? The solution is to look at examples of conduct (judicial “experience”) to see why courts are driven (by their “gut reactions”) to findings of unacceptable conduct in spoliation determinations. Conduct will fall along the continuum of fault: “[F]ailure to produce evidence occurs ‘along a continuum of fault-ranging from innocence through the degrees of negligence to intentionality.’” (*2 n. 9, citing Reilly v. Natwest Markets Grp. Inc., 181 F.3d 253, 267 (2d Cir.1999)).
In the Pension case, Judge Scheindlin goes through some case-specific examples to provide us with some guidance on the judicial-experience thought process. As Judge Scheindlin stresses, “[t]hese examples are not meant as a definitive list.” But, they are some examples of conduct failures identified by cases and where, according to Judge Scheindlin, such conduct falls along the continuum of fault, after the duty to preserve has attached:
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Practice Tips from Pension
The opinion by no means only focuses on the tortuous conduct of the parties in spoliation. In fact, Judge Scheindlin provides us with a few gems that can help litigants conduct themselves in an acceptable manner through discovery. Specifically, she provides some guidance on the timing of the duty to preserve (the trigger), content of written litigation hold notices, how to prepare 30(b)(6) witnesses for deposition on procedures undertaken during discovery and how to approach the preservation of backup tapes.
Preservation triggers and spoliation burdens
Judge Scheindlin notes that a “plaintiff's duty is more often triggered before litigation commences, in large part because plaintiffs control the timing of litigation.” (*4). She also asks the question: “Who then should bear the burden of establishing the relevance of evidence that can no longer be found?” (*4). Pension adopts the burden-shifting test that “[w]hen the spoliating party's conduct is sufficiently egregious to justify a court's imposition of a presumption of relevance and prejudice…the burden then shifts to the spoliating party to rebut that presumption.” (*6).
Litigation hold notice standards and reigning in rogue employees
Pension provides guidance to parties in meeting the “standard for a litigation hold.” The timely written notice should:
1. “Direct employees to preserve all relevant records – both paper and electronic;” (*8)
2. “Create a mechanism for collecting the preserved records so that they can be searched by someone other than the employee;” (*8) and
3. Contain an instruction to “immediately suspend the destruction of any responsive paper or electronic documents or data.” (*8 n. 67).
And with respect to employees, the directive in the notice should not place “total reliance on the employee to search and select what the employee believed to be responsive records without any supervision from Counsel.” (*8). Judge Scheindlin notes “that not every employee will require hands-on supervision from an attorney. However, attorney oversight of the process, including the ability to review, sample, or spot-check the collection efforts is important. The adequacy of each search must be evaluated on a case by case basis. (*8 n. 68).
The requirement of employee supervision is a bit of a deviation from best practices. The Sedona Conference® holds the position that: “The reasonableness of reliance on employees to follow directions must be assessed in the context of the particular facts and circumstances.” See The Sedona Conference® Commentary on Preservation, Management and Identification of Sources of Information that are Not Reasonably Accessible, July 2008. The fact that note 68 was one of the corrections Judge Scheindlin added when she amended the Pension order may be an acknowledgment of the deviation this position takes.
Also, Judge Scheindlin’s second requirement to “create a mechanism for collecting the preserved records so that they can be searched by someone other than the employee” has never been a requirement for reasonableness. Would this requirement then suggest that there is a “duty to collect-to-preserve” instead of preserving-in-place?
Witnesses should be prepared on discovery topics
The opinion also addresses a litigant’s duty to adequately prepare knowledgeable witnesses with respect to [discovery topics] by ensuring they are prepared to know: (*10)
1. Which files were searched;
2. How the search was conducted;
3. Who was asked to search;
4. What they were told; and
5. The extent of any supervision. (*10)
As we can see, supervision by an attorney throughout the discovery process is a theme in Pension.
Redundant backup tapes do not need to be preserved
And finally, on the subject of backup tapes, Judge Scheindlin is unequivocal in clarifying that it is “not requir[ed] that all backup tapes must be preserved. Rather, if such tapes are the sole source of relevant information (e.g., the active files of key players are no longer available), then such backup tapes should be segregated and preserved. When accessible data satisfies the requirement to search for and produce relevant information, there is no need to save or search backup tapes. (*12 citing FRCP 26(b)(2)(B)). This is the business case for companies to use backup tapes only for purposes of disaster recovery rather than archiving.
Reaction to the Revisited
This opinion has already caused a stir in the e-discovery world. Will this case be cited and analyzed as Judge Scheindlin’s subtitle “Zubulake Revisited” foreshadows, in a similar manner to Zubulake? That remains to be seen. Rather than add clarity, the Pension opinion contributes to ambiguities of the law of e-discovery because its rationale shows us that the only certainty today is that the standard by which compliance will be measured tomorrow will be predominantly determined by the “gut reaction” of a judge in some future litigation. As Judge Scheindlin puts it (through the words of George Santayan), “’[t]hose who cannot remember the past are condemned to repeat it.’” (*1). Yet, what can be said of those litigants who did remember the past, and thought they had applied its lessons in good faith, only to have a judge later decide that the lessons learned were the wrong ones?
Pension may be seen as standing for the proposition that the concepts of “contemporary standards” and continuums of fault, in the context of the duty to preserve, are temporal, moving targets, that are as varied as the opinions of the many judges that may someday decide the issue. Leaving compliance to be measured by the subjective determination of future courts, as Judge Scheindlin seemingly advocates, means that today's preservation decisions cannot be made with any degree of clarity or predictability. Those decisions, instead, will be judged innocent, negligent, grossly negligent and intentionally willful, on a case-by-case basis, through the subjective haziness of the judge's rear view mirror.