Judge Scheindlin’s Latest Ruling
E-discovery rules first coalesced during 2003 and 2004 in a series of rulings by Judge Scheindlin known as the Zubulake decisions (named after Laura Zubulake, a plaintiff in a gender-discrimination case). Judge Scheindlin’s newest decision, Pension Comm. of the Univ. of Montreal Pension Plan v. Banc of Am. Sec., LLC, No. 05 Civ. 9016, 2010 WL 184312 (S.D.N.Y. Jan. 15, 2010), significantly alters the ground rules for preserving and storing electronically stored information relevant to an anticipated federal lawsuit.
In Montreal Pension Plan, aggrieved investors sued for $550 million after two British Virgin Island-based hedge funds in which they purchased shares entered receivership and were subsequently liquidated. Several defendants discovered gaps in the plaintiffs’ document production, and upon that discovery seized the opportunity to go on the offensive against their accusers. Depositions were taken as to plaintiffs’ information-retention efforts, sworn statements as to information preservation were procured, yet the court imposed sanctions even though intentional wrongdoing was absent. The court, specifically noting that this was not a case of “egregious examples of … destroying evidence,” sternly warned that companies must preserve, collect, and review potentially-relevant information in a meaningfully-diligent way whenever litigation reasonably is anticipated.
Hindsight Reigns Supreme – Anything Lost, Even Innocently, May Result in Sanctions
What makes Judge Scheindlin’s decision relevant is that you now have an obligation to preserve electronic information as soon as litigation reasonably is anticipated, meaning that your preservation obligations can be triggered before the lawsuit is even started. The court’s decision makes clear that your best efforts may not satisfy the court and that lost or destroyed information potentially relevant to a litigation could result in a finding of negligence. Even unintentional negligence can result in a material sanction against your company. To paraphrase the court, “a pure heart and an empty head” is no defense.
